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Ifo says more than half of German firms have been hit by fallout from the virus outbreak

  
  Analysis
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Ifo institute with their latest survey among 3,400 German firms

Germany
  • 56% are suffering from negative effects from the virus outbreak
  • 63% of manufacturing and trade companies said they were negatively affected
  • Problems from postponement of business trips, supply chain issues, lower demand
  • 96% of firms in the tourism sector, 79% in hospitality sector said they were affected
It is but a small sample size and I would argue that the negative implications don’t just apply to one particular country. It is pretty much the same all across the globe and the impact is much worse on countries like Italy, Japan and South Korea.

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.
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