US-China trade battle knocks German investor confidence

Frankfurt am Main (AFP) –


Confidence among German investors fell back in May, a closely-watched survey showed Tuesday, as Europe's largest economy fretted over the knock-on effects of the US-China trade conflict.

Expectations for economic performance in the coming months dropped 5.2 points compared with April, to -2.1, according to the ZEW institute's regular sounding of almost 200 analysts and financial players.

"Financial market experts continue to expect restrained economic growth for the coming six months," ZEW president Achim Wambach said in a statement.

"The latest escalation in the trade conflict between the United States and China has once again increased uncertainty about German exports, and thereby a central factor for GDP growth," he added.

While direct exchanges of trade blows across the Atlantic have so far been limited, Germany is indirectly harmed by any impact on the Chinese economy -- one of the eurozone heavyweight's biggest export customers -- from the trans-Pacific showdown.

The ZEW survey period from May 6 to May 13 covers last weekend, when US President Donald Trump announced a hike in import duties on hundreds of billions of dollars in imports from China starting next month.

Beijing has already said it would fire back with higher border taxes on $60 billion of US wares.

Brighter spots in Tuesday's investor survey came in judgements of Germany and the eurozone's present economic situation, which both gained, although views of the single currency bloc remained negative overall.

Looking ahead, economic expectations for the euro area dropped sharply, entering negative territory at -1.6.