Germany – Strong euro weighs on Early Bird

The Earl Bird continues to give hope that the German economy will overcome its three-year period of weakness. Although it fell by four points in June due to a stronger euro, it remains clearly in positive territory with 37 points, particularly due to a still expansionary monetary policy. These should ensure that the German economy continues to pick up in the coming months.

This outlook remains unchanged despite the fact that the Early Bird does not take into account two effects that will have a noticeable impact on the German economy this year and next: the trade conflict instigated by the US president and the marked change in the course of German fiscal policy. However, as these two effects are working in opposite directions, they are likely to cancel each other out, at least in part, from a macroeconomic perspective. In addition, the euro has recently strengthened, particularly against the dollar, with the dollar clearly suffering from the current erratic US economic policy and Donald Trump's continued pressure on the Federal Reserve. The reasons for the weaker global economy are also likely to be found here, at least in part. Consequently, the negative effect of the current US policy on the German economy is at least indirectly taken into account.

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