German Ifo business climate index falls further in June, GDP likely to grow just marginally in 2019
Germany’s Ifo business climate continued to ease in the month of June. The significant leading indicator for the Germany thus does not yet give the all-clear, although most economists anticipate somewhat more growth for the second half of 2019, noted Commerzbank in a research report.
The Ifo business climate dropped further in June to 97.4 from prior month’s 97.9. While firms assessed their current business situation virtually unchanged, they have downwardly revised their expectations for the coming six months.
While the business climate in the domestic-oriented service sector dropped somewhat and stayed at quite high levels, the decline in the export-oriented manufacturing sector continued. The Ifo business climate therefore does not affirm the recovery seen in the June German manufacturing PMI.
Overall, there are increasing questions regarding the most economists’ forecast that economic growth will pick up a bit in the second half of 2019.
“The weak Ifo business climate gives rise to fears that the German GDP will grow at best marginally in the third quarter. For 2019 as a whole, we continue to expect only a slight increase of 0.4 percent”, added Commerzbank.
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