The eurozone was unexpectedly one of the best performers among major economies last year. But surveys suggest that growth has steadily slowed since January on euro strength amidst fears of a trade war between China and the United States.
German business confidence fell for a fifth consecutive month in April to reach the lowest level in more than a year, the Ifo institute said on Tuesday. This suggests that perhaps Europe’s biggest economy is losing some steam.
The Chief of the Munich-based Ifo institute, Clemens Fuest said that
“High spirits among German businesses have evaporated…the German economy is slowing down.”
He went on to say that the new business climate index, which for the first time incorporated responses from the services sector, fell to 102.1 from 103.3 in March.
But Germany isn’t alone France and Italy, the two other largest economies in the EU experienced a deteriorating in confidence as stronger currency and capacity constraints limited output.
Data from France’s national statistics body has indicated this week that industrial morale has dropped to 109 points in April, down from a revised figure of 110 points for March.
In Italy, the euro zone’s third largest economy, morale among businesses also fell amid political stalemate in the wake of inconclusive national elections seven weeks ago.
The governor of the Bank of France,Francois Villeroy de Galhau, has cited uncertainty from the United States as the reasons why the economy is showing sings of decline.
Speaking at the CityWeek Banking Conference in London, the Governor said that:
“We are all aware that an escalation of protectionist threats from the United States would dampen growth everywhere.”
But what this goes on to show is that this may be a series of signs that the currency bloc may have reached its peak and that it will need to closely watch for further signals of decline.