FRANKFURT – The trade cease-fire between the European Union and U.S. President Donald Trump boosted optimism among German business executives heavily dependent on trade for their profits, a closely watched economic index showed Monday.
The Ifo institute index rose to 103.8 points from 101.7 in July. The result was better than the 101.8 expected by market analysts.
Ifo President Clemens Fuest said Monday that “aside from a strong domestic economy the cease-fire in the trade conflict with the U.S. contributed to the better mood.”
Trump had threatened to impose new tariffs, or import taxes, including on new cars and car parts. That raised fears of a cycle of retaliation that could hurt trade and growth. But Trump agreed to hold off after talks with European Commission head Jean-Claude Juncker.
Germany, Europe’s largest economy, gets much of its growth from exports. Its strength is one reason the European Central Bank remains confident it can end its bond-purchase stimulus program at the end of the year. The monetary stimulus involves the central bank for the 19 countries that use the euro purchasing government and corporate bonds from banks with newly printed money, a step which is aimed at increasing credit, growth and inflation.
Fuest said in a statement that the August reading was consistent with third-quarter growth of 0.5 per cent quarter on quarter. That would match the 0.5 per cent figure from the first quarter.