Mubasher: Germany’s economic growth gained momentum in the second quarter of 2018, official data showed on Tuesday.
Amid a spiralling global trade disputes and an escalating currency crisis in Turkey, outlook for businesses, however, remained dim.
Gross domestic product (GDP) grew 0.5% in the period between April and June from the previous quarter, while GDP climbed 1.8% year-on-year in Q2-18, the Federal Statistical Office (Destatis) said.
The “positive impulse” was attributed to domestic demand, as spending by households and government picked up steam quarter-on-quarter.
Moreover, investment in factories and machinery also sped up slightly during the second quarter.
Private consumption is set to remain strong in the forthcoming, buttressed by a resilient labour market and higher wages, but rising inflation kept a lid on any effects of the pay gains.
Nevertheless, US trade tensions, particularly the strained trade relations between Washington and Beijing, started to undermine business confidence in Germany.
While analysts were more positive about the US economy, largely driven by the sweeping tax cuts and growing appetite for larger projects, they were concerned over the business outlook in the Eurozone.
Such concerns were illustrated by the fact that Germany’s economic growth lost momentum in late 2017, while economic data indicated that the growth will not pick up its trajectory in the near term.
The European country’s factory orders slipped 4% month-on-month in June, stoked by 5.9% drop in demand from outside Europe.
Moreover, companies started to see a touch of the currency crisis in Turkey, the VDMA industry group stated on Monday, having the Turkish lira (TRY) plunging by more than 70% against the euro since the beginning of 2018.
Germany’s machinery exported to Turkey slipped by 4.7% year-on-year between January and May, the VDMA said, predicting the negative trend to persist.
Despite Turkey is not one of Germany’s trade allies, business confidence and bank lending in the Eurozone could be hit by the crisis.
By 9:36 am GMT, the EUR/USD pair went down 0.11% to $1.1397.
