Germany’s GDP growth outlook hit by euro crisis, US-EU trade conflict

Ifo said the economic upswing in Germany should continue but at a slower pace, echoing an assessment by the Bundesbank last week. (Reuters)
Updated 19 June 2018
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Germany’s GDP growth outlook hit by euro crisis, US-EU trade conflict

ERLIN: Germany’s Ifo institute on Tuesday cut its forecasts for growth in Europe’s biggest economy this year and next, citing a weak start to the year and increased global risks.
Ifo said it expected the German economy to grow by 1.8 percent this year and in 2019, a big revision downwards from previous forecasts of 2.6 percent and 2.1 percent respectively.
“The economy developed significantly more weakly than anticipated in the first few months of the year,” Ifo economist Timo Wollmershaeuser said. “The global economic risks have risen significantly,” he added.
Ifo said the economic upswing in Germany should continue but at a slower pace, echoing an assessment by the Bundesbank last week.
In addition to weak industrial activity and exports in the first four months of the year, a trade dispute between the United States and the European Union is clouding the outlook for the German economy. US President Donald Trump is threatening to impose hefty tariffs on car imports from European allies in addition to unilateral metals duties.
The Bundesbank said on Monday that German growth should rebound in the second quarter thanks to higher state spending, a humming construction sector and strong private consumption.
But it warned that trade and political concerns have made the outlook for the economy more uncertain and revised down its own growth projections.
A new Italian coalition government that comprises anti-establishment parties with a brief to shake up EU institutions has also unnerved German companies.
“The downside risks for the German economy have significantly risen,” said Ifo’s Wollmershaeuser. “Germany’s economic advantages are far outweighed by two risks — euro crisis 2.0 through Italy and a trade war.”
As well as the US-EU trade dispute, German business leaders are worried that a trade confrontation between the United States and China could harm exporters that rely on the world’s two largest economies for growth.
China has raised tariffs on $50 billion in US goods, responding to similar measures by Trump, who has also threatened a 10-percent tariff on $200 billion of Chinese goods.
“The likelihood that we have a trade war that also affects Germany is higher now than it was in spring,” said Wollmershaeuser.


Saudi banks, Dubai shares give Gulf markets a timely boost

Updated 24 January 2019
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Saudi banks, Dubai shares give Gulf markets a timely boost

  • The Dubai index was up by 0.9 percent with Emirates NBD, its largest bank, adding 2.1 percent and its largest listed developer Emaar Properties gaining 2.2 percent
  • Nasdaq-listed DP World increased 0.7 percent after increasing its stake in its Australia unit

DUBAI: The Dubai stock market snapped a three-day losing streak on Wednesday, boosted by its financial and property shares, while Saudi Arabia rose on the back of its banks.
The Dubai index was up by 0.9 percent with Emirates NBD, its largest bank, adding 2.1 percent and its largest listed developer Emaar Properties gaining 2.2 percent. Gulf Arab economies are expected to grow at a slower pace than previously forecast, a quarterly Reuters poll of economists found, as oil output cuts, lower crude prices and weaker global growth put pressure on regional economies. Amlak Finance rose 2.2 percent after announcing a renegotiation of restructuring terms with its financiers to allow more flexibility in adapting to “current market conditions.” Nasdaq-listed DP World increased 0.7 percent after increasing its stake in its Australia unit.
The port operator will spend at least $250 million buying back some shares in its Australian port terminals unit. Saudi Arabia’s index rose 0.8 percent, with nine out of 10 banks rising.
Al Rajhi Bank was up 0.6 percent and Samba Financial Group closed 1.7 percent higher. Petrochemical investor Alujain added 1.5 percent after an update on the fire at its affiliate’s plant.
The company said it now expects the NATPET plant to start operating all units by the end of September.
The Egyptian blue-chip index was up 0.2 percent with its largest listed bank Commercial International Bank gaining 4.2 percent.
The Egyptian Exchange on Wednesday canceled all transactions made the previous day in local firms Sixth of October Development and Investment Company (SODIC) and Madinet Nasr for Housing and Development (MNHD).
The move followed SODIC’s decision against a takeover of MNHD and involved their shares being suspended on Wednesday as the bourse reset prices. Global Telecom Holding jumped by 10 percent before trading on its shares were suspended, pending a statement from the company after VEON Ltd, a major shareholder in the firm, said it was considering taking it private.