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Ifo economist says that German economy faces a turbulent time ahead

  
  Analysis
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Comments by Ifo economist, Klaus Wohlrabe, following the data earlier

Germany
  • Sees a slightly positive growth rate in 2H 2019 for Germany
  • But notes that recession is spreading in all important sectors in German economy
  • Says risk of disorderly Brexit has increased
  • Doesn’t believe that the ECB will loosen policy today
The early signs for Q3 haven’t been encouraging for Germany with the manufacturing sector in freefall as the recession in that area deepens. As that continues, the risk of spillover to the services sector will intensify and that won’t bode well for the economic outlook.
As for his comment on the ECB, I’m also leaning more towards that as the governing council may likely see fit to only change its forward guidance as they will only release their latest staff projections in September. That said, they will be skating on very, very thin ice in the mean time in managing the euro and inflation expectations.

Germany July Ifo business climate index 95.7 vs 97.2 expected

  
  Analysis
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Latest data released by Ifo – 25 July 2019

  • Prior 97.4; revise to 97.5
  • Expectations 92.2 vs 94.0 expected
  • Prior 94.2; revised to 94.0
  • Current assessment 99.4 vs 100.4 expected
  • Prior 100.8; revised to 101.1
Slight delay in the release by the source. A measure of business conditions and sentiment/expectations towards the German economy. Do be reminded the Ifo changed the indicator measurement to take into account of services data too as of April 2018.
That’s the weakest headline reading since April 2013 with expectations and current conditions both also seen slumping further in July. This continues to reaffirm weakness in the German economy as we begin Q3.
I reckon concerns about a recession won’t be too far off now. EUR/USD holds steady near the lows for the day at 1.1130 after hitting a session low of 1.1122 briefly, with anticipation still on the ECB policy decision later today.
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