Ifo’s index for export expectations fell in May to 13.6 balance points, from 15.6 points in April. In May 2017, the index stood at 19.6 balance points and reached a four-year high in July 2017 at 23.7 balance points (see graph).
“The difficult global economic environment is increasingly troubling German exporters. Export expectations in the auto industry were significantly dampened [and] companies expect hardly any growth,” said Clemens Fuest, Ifo’s president.
The pessimism in the automobile industry during the month may also be associated to talk in the US, encouraged by the country’s President Donald Trump, to impose tariffs on EU cars, which are subject to lower tariffs than those US cars entering the 28-country bloc.
The key German automobile industry is a large exporter to the US, and an important employers in the country. “By contrast, firms in the electrical and mechanical engineering industries anticipate further export growth, although here too optimism has weakened,” added Fuest.
“Food and beverage producers, however, expressed more frequent expectations for improved foreign business.” A more pessimistic outlook by German exporters follows the publication of lower manufacturing performance during April in the eurozone as a whole, hitting an 18-month low, according to IHS Markit earlier this month.
Germany’s chemical trade group VCI also said on 16 May that the country’s chemicals output, excluding pharmaceuticals, had dropped 2.4% in the first quarter, year on year, as production rates normalised after an unusually strong end to 2017.