Global economy outlook darkens due to escalation in tariff warfare: Ifo Institute

The economic outlook has deteriorated worldwide as the trade dispute between the United States and China intensifies, an expert survey said on Monday.

Aerial view of the logistics port in Lianyungang, Jiangsu Province (China)

Aerial view of the logistics port in Lianyungang, Jiangsu Province (China). EFE / EPA / ALEKSANDAR PLAVEVSKI / Archive

Reuters | Michael Nienaber

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Leer en español: Panorama de economía global se oscurece por escalada en guerra arancelaria: instituto Ifo

The German Ifo Institute said in a quarterly survey among 1,200 analysts in more than 110 nations that its two measurements on current economic expectations and conditions worsened in the third quarter. 

"Experts expect significantly weak growth in world trade," said Ifo President Clements Fuest, adding that expectations about the exchange of goods hit their lowest level since the beginning of the tariff fight last year.

"Respondents also expect lower private consumption and investment activity and a decline in short and long-term interest rates," said Fuest.

The president of the United States, Donald Trump, said Friday that he is not ready to close a trade agreement with China and even questioned the round of talks scheduled for September, which generated fear among financial markets of a prolonged trade war.

Also read: Rate cuts, China data caps dollar gains

The United States and China are important destinations for German manufacturing exports, so the rising tariffs between the two largest economies in the world are having a profound impact on German factories.

Analysts expect that Germany's economy - the largest in Europe - will have contracted in the second quarter and confidence indicators do not anticipate an improvement for the period from July to September.

"We are in a poorly defined area between economic slowdown and a recession," said economist Joerg Kraemer of Commerzbank.

The Federal Statistics Office of Germany will publish preliminary figures on GDP behavior in the second quarter on Wednesday. A Reuters survey of analysts projected a quarterly contraction of 0.1%.