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German export outlook worsens again in May: study

BERLIN
2018-05-29 13:52

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German exporters have downgraded their business expectations for the sixth month in a row, a study by the Institute for Economic Reseach (Ifo) showed on Monday.

The closely-watched Ifo barometer for exporting-oriented companies fell by 2.0 points to 13.6 points in May, the lowest measurement in more than a year. The findings were based on a monthly survey of 2,300 industrial companies conducted by the Munich-based researchers.

"The difficult global economic environment is increasingly weighing on German exporters," a statement by Ifo president Clemens Fuest read.

Fuest highlighted that the automotive industry in particular "barely expected any further growth" in their international sales.

At the same time, however, expectations in the German electronics and engineering industry remained more robust. Similarly, food producers were hopeful that they could still improve their current export performance.

According to a recent survey by the Association of German Chambers of Industry and Commerce (DIHK), every fourth company in Germany is worried that growing protectionism poses a threat to their business model. Companies hereby feel particularly threatened by new U.S. import tariffs as well as economic sanctions imposed by Washington against countries like Russia and Iran.

U.S. President Donald Trump is resorting to a 1960s trade law to assess whether car import tariffs could be justified on the grounds of U.S national security. Carmakers like Volkswagen and BMW subsequently highlighted that free market access was a crucial factor in the German automotive industry's success and one that also underpinned growth in the global economy as a whole.

Import tariffs on foreign-manufactured vehicles could rise to 25 percent in the U.S. compared to a relatively low duty currently levied on most passenger vehicles brought to the country of 2.5 percent. The change would consequently lead to a significant rise in cost shouldered by the German firms in the important U.S. market.
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