BERLIN, Aug. 27 (Xinhua) -- The prospect of a de-escalation in the ongoing trade conflict between the United States and European Union (EU) has propelled German business confidence to its highest level in half a year, a study published on Monday by the Institute for Economic Research (Ifo) finds.
The closely-watched Ifo Business Climate Index compiled rose by 2.1 points to 103.8 points in August. The finding was based on a monthly survey by the Munich-based institute of 9,000 managers at German companies from various business sectors.
"The German economy is currently experiencing a summer high", a statement by Ifo President Clemens Fuest read. Fuest attributed the development to a "ceasefire in the global trade conflict", and the lasting strength of the domestic economy in Germany.
Managers polled by Ifo were slightly more upbeat about their current commercial situation, as well in their assessments of future prospects compared to the previous month. The trend held for firms across the retail-, industrial manufacturing-, service- and construction sectors considered in the Business Climate Index and thus marked the end of a series of six consecutive months of decline in confidence for industrial manufacturers.
Fuest highlighted the "significantly more optimistic expectations of industrial firms, especially in the automotive industry" as having contributed to the better than expected findings. Most economists had forecast a lower reading of 101.9 points for August.
During a recent meeting with U.S. President Donald Trump in Washington, EU Commission President Jean-Claude Juncker secured a pledge from the United States to exempt the bloc from further punitive tariffs on automotive imports. Instead, the EU and United States would focus on launching negotiations for a program of mutual tariff reduction and reforms of the surveillance- and enforcement mechanisms of the World Trade Organization (WTO).
German minister for the economy Peter Altmaier (CDU) has welcomed temporary respite in the trade conflict between the EU and United States. Nevertheless, Altmaier warned that the concessions won by Juncker could "only be a first step" towards a wider reversal of the Trump's protectionist "America First" doctrine.
Chancellor Angela Merkel (CDU) and German business associations have repeatedly called for mutual tariff reductions as a means to repair strained transatlantic ties and help improve the export competitiveness of the U.S. economy. Such an elimination of trade barriers in the automotive and other sectors would have to take place in rules-based framework of the WTO.
