Breaking News
Investing Pro 0
💎 Access the Market Tools Trusted by Thousands of Investors Get Started

German economy faces 'lean' Christmas as business morale sinks

Published Dec 18, 2018 05:59AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. General view shows atrium of Mall of Berlin shopping centre during its opening night in Berlin

By Joseph Nasr and Rene Wagner

BERLIN (Reuters) - German business morale fell in December, a survey indicated on Tuesday, suggesting that concerns among company executives about the growth outlook for Europe's biggest economy are rising.

The Munich-based Ifo economic institute said its business climate index fell for the fourth month in a row to 101.0, its lowest level in more than two years. This was weaker than a Reuters consensus forecast of 101.8.

"Concern is growing among German businesses," said Ifo chief Clemens Fuest. "Companies were less satisfied with their current business situation. Their business expectations also continued to deteriorate. The German economy faces a lean festive season."

Trade frictions, risks linked to the possibility of Britain leaving the European Union next year without a deal and weaker growth in emerging markets are putting the brakes on a nine-year upswing in Europe's economic powerhouse.

Ifo economist Klaus Wohlrabe said the German economy was slowing but there was no recession in sight.

This has prompted the government to lower its growth forecast for this year to up to 1.6 percent. Ifo said the business climate level confirmed its prediction for 1.5 percent growth.

As the year draws to a close, the risks for the German economy appear to be outweighing any impetus from the global economy, said Andreas Scheuerle of DekaBank.


Scheuerle cited Brexit and mass anti-government protests in France as possible headwinds for Germany, adding that signs of a detente in the trade conflict between China and the United States could spell good news for the German economy.

"Global news is fluctuating between concerns and relief," said Scheuerle. "Pre-Christmas delights are not to be expected," he wrote in a note."

The government hopes tax cuts for middle and high income earners as well as higher child allowances that go into effect in January will boost consumption, which has replaced exports as the main driver of growth.

Ifo's Wohlrabe said consumption could be performing better in view of increases in income and employment.

The economy is expected to rebound in the fourth quarter after a contraction of 0.2 percent between July and September, partly because one-off effects like bottlenecks in new car registrations due to stricter pollution standards should ease.

A low interest rates environment created by the European Central Bank, a solid labor market and rising wages should provide growth momentum in the face of rising risks.

"The risks to our forecast for growth in Germany to rebound, from 1.5 percent this year to 1.8 percent in 2019, are clearly mounting," said Andrew Kenningham of Capital Economics.

He added: "For now we are still forecasting the ECB to raise interest rates in September 2019 but it is looking increasingly likely that a softer economic backdrop will force it to leave policy rates unchanged for longer."

German economy faces 'lean' Christmas as business morale sinks

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email