Business morale in Germany hits highest level in over a year
FRANKFURT, Germany - German business morale rose to its highest level in over a year in July, a closely-watched survey showed on July 25, reinforcing hopes that Germany's struggling economy is slowly recovering.
The Ifo institute's confidence barometer rose slightly to 88.6 points, up from 88.4 a month earlier, its seventh straight increase and the highest level since May 2024.
The rise was, however, slightly smaller than that expected by analysts polled by financial data firm FactSet.
'Sentiment among German companies has improved somewhat,' Ifo president Clemens Fuest said.
But 'the upturn in the German economy remains sluggish,' he added.
Hit by high production costs as well as increasingly fierce Chinese competition for key exports such as cars, Europe's top economy was in the doldrums even before US President Donald Trump slapped it with new tariffs in April.
But new Chancellor Friedrich Merz has pressed ahead with tax breaks and massive spending plans in a bid to revive growth, and an uptick in data since the start of the year has boosted hopes that the worst might be over.
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'A wave of optimism seems to have caught the German economy,' ING bank analyst Carsten Brzeski said, though he cautioned that Germany was 'highly affected' by trade tensions in the short-term.
US and European Union diplomats
are currently negotiating ahead of the latest deadline set by Mr Trump, who has threatened a further blanket duty of 30 per cent on EU exports after Aug 1 if no agreement is reached. AFP
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Straits Times
10 minutes ago
- Straits Times
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When Mr Trump proclaimed 'Liberation Day' on April 2 with 'reciprocal tariffs' on the US' trading partners, Beijing and Washington engaged in a tit-for-tat tariff war. At one point, American importers had to pay a 145 per cent tax on Chinese goods. But bilateral trade talks since May 12 have de-escalated the situation. US and Chinese officials are set to meet in Stockholm next week (from July 27) to discuss a possible extension of a 90-day truce. The fireworks industry presents a case study showing how, despite trade tensions and strategic competition, the US and China remain economically intertwined. While US businesses now adopt a cautious approach in placing orders, the deals have continued to flow as Chinese manufacturers remain competitive. Liuyang has over decades accumulated the technical know-how, the quality of its raw materials, proper regulatory oversight and strict transportation requirements, Mr Wu said. Factories dot the surrounding mountainous terrain of the city, about an hour's drive from the inland Hunan capital of Changsha. Production has to stop for about a month for safety reasons every summer because of the heat. 'America needs fireworks – this will not change,' said Mr Wu. 'At the very most, they will buy fewer, but they will not stop buying completely. In addition, we have good relations with our customers who trust in our products, and they also believe that this (tariffs issue) is temporary.' Screenshot from a video Mr Wu took of a Fourth of July fireworks celebration in Ohio earlier in July. His company's products were used. PHOTO: MARX WU According to the American Pyrotechnic Association, 90 per cent of professional display fireworks used in the US are imported from China. Reports say that US companies import close to US$400 million worth of consumer fireworks from China each year. 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Rows of dozens of shops at Yiwu International Trade City in Zhejiang province selling Christmas decorations were largely empty when ST visited in early July. ST PHOTO: LIM MIN ZHANG Ms Guo Xiabing, an entrepreneur in Zhejiang who runs a factory making Christmas trees in Yiwu, said that typically, US customers are more able to afford higher-priced products, such as those with more fanciful ornaments. She shared about her factory's race to ship orders in the 90-day trade truce between the US and China in a documentary aired in June. 'Customers also do not want to give up on the orders. But that also means that we are left hanging, not knowing when we can resume production and shipping. This type of uncertainty causes a lot of anxiety. Should we let go of the workers? How would we find jobs for them?' she said. Yet others have taken a longer-term view, and have long made efforts to diversify away from the US market. 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Business Times
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