Fear of US protectionism swelling among German firms

AP News
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Posted: Jan 25, 2017 10:13 AM

BERLIN (AP) — German business confidence fell modestly in January as a result of rising worries over whether the Donald Trump administration in the United States will turn more protectionist, a closely watched survey found Wednesday.

The Ifo Institute said its main index for Europe's largest economy fell to 109.8 points in January from 111 points in December. Overall, it found companies generally more satisfied with their current lot. However, that was more than offset by waning expectations.

ING economist Carsten Brzeski said German businesses appear to be "getting increasingly concerned" about U.S. President Trump, who has promised to rewrite free trade deals and even slap tariffs.

Brzeski noted that 10 percent of German exports go to the U.S., more than any other country. He also said the British pound's steep decline against the euro and uncertainty over Britain's exit from the European Union are also weighing on sentiment.

The Ifo Business Climate Index is based on around 7,000 monthly survey responses from firms in manufacturing, construction, wholesaling and retailing.

Also Wednesday, the German government stuck with its previous projection that the country's growth rate would slow to 1.4 percent this year from 1.9 percent last year.

Economy Minister Sigmar Gabriel did signal a note of caution, however, saying Germany's economy is dependent on open markets and that "the globally noticeable inclination toward protectionism, as is visible from the Brexit decision and the statements by the new U.S. government, is .... the wrong way to create wealth for everyone."

Ultimately, he said "protectionism will make all of us poorer."

He told reporters in Berlin that the labor market remained robust, with the number of people employed rising last year to 43.5 million, and predicting another 320,000 jobs would be created this year.

The unemployment rate was at 6.1 percent last year — the lowest since Germany's reunification in 1990, Gabriel said.