The German economy remains stable. Domestic companies are convinced that this is the case in the current ifo survey – despite all the current risks and uncertainties. The fact that the US-Europe trade dispute eased somewhat following the Trump-Juncker meeting certainly helped. But an escalation of the conflict between the USA and China could also still hurt the German economy.
The economy is no longer running as smoothly as in 2017, but it is still ticking over. This is also revealed in the Ifo survey for August; companies remain upbeat. This is particular so for industries that generate their revenue primarily in Germany, such as the construction and service industries.
The trade conflicts and geopolitical risks have led to a degree of economic disruption, and an export-dependent country like Germany quickly feels the effects of something like this. This is particularly reflected in the industrial sector where the business climate index for the manufacturing industry fell six times before recovering again in August.
Aggregate economic growth is expected to be slightly below 2% in 2018, but we still expect a good result. Given the uncertain global situation and the shortage of skilled workers, little more than this can be expected from the German economy for the time being.