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German consumer confidence to slow slightly as economic headwinds loom


German consumer confidence to slow slightly as economic headwinds loom

German economy confidence
German economy confidence
Photo: Daniel Roland/AFP/Getty

The German consumer confidence index for January will be released today; it is likely to show a continued downward trend in the EU’s strongest economy.

In contrast to last January’s 10.8 index, today’s rate is expected to hit 10.3, the lowest score since May 2017. February faces a forecast of 9.8.

The trade war between the US and China weighed heavily on the minds of German consumers as they feared higher tariffs will lead to reduced exports. US President Donald Trump has also indicated extending his protectionist policies to higher tariffs on European car imports, a key industry for Germany. Furthermore, uncertainty over Brexit escalated this month as fears of a no Brexit deal rose.

As the German economy is significantly dependent on exports, its reduction along with less consumer spending will make GDP growth harder to achieve. Already, Germany’s 2019 GDP forecast dropped by 0.8%. With Germany providing over a quarter of the EU’s output and demand, Europe will likely also face a hit.

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If the trade wars persist, expect further downturn across Europe. In the long-term, this, following the mood of Brexit and Trump’s protectionism, could spark more anti-EU sentiment.

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