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Economy Global economic outlook darkens amid escalating trade dispute, Germany’s IFO says

Clemens Fuest, president of the Institute for Economic Research (IFO) says the experts expect significantly weaker growth in world trade.

CHRISTOF STACHE/AFP/Getty Images

The economic outlook has deteriorated worldwide as the trade dispute between the United States and China escalates, a survey showed on Monday.

Germany’s IFO economic institute said its quarterly survey among nearly 1,200 experts in more than 110 countries showed that its measures for current conditions and economic expectations have both worsened in the third quarter.

“The experts expect significantly weaker growth in world trade,” IFO president Clemens Fuest said, adding that trade expectations hit the lowest since the beginning of the tariff conflict last year.

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“Respondents also expect weaker private consumption, lower investment activity, and declining short- and long-term interest rates,” Mr. Fuest said.

U.S. President Donald Trump said on Friday he was not ready to make a trade deal with China and even called a September round of talks into question, raising fresh doubts in financial markets that the dispute is unlikely to end any time soon.

The U.S. and China are important export destinations for German manufacturers, so the tit-for-tat tariff dispute between the world’s two largest economies is having a large impact on German goods producers.

The German economy, Europe’s largest, is widely expected to have contracted in the second quarter, and sentiment indicators suggest hardly any improvement in the third.

“We’re in the twilight zone of a marked economic slowdown and a recession,” Commerzbank economist Joerg Kraemer said.

Germany’s Federal Statistics Office will release preliminary gross domestic product figures for the April-June period on Wednesday. A Reuters poll of analyst predicts a 0.1-per-cent contraction quarter-on-quarter.

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