International risks have increased due to the coronavirus epidemic
- The German economy is still experiencing a period of weakness
- The industrial sector remains weak
- But improved business sentiment suggests some stability over the coming months
- The impact of the coronavirus epidemic on China and trading partners cannot be estimated at this time
These are part of the general comments of the German MPs after the release of GDP data for the last quarter earlier today. The report noted that German economic conditions were shrinking in the last quarter of 2019 and the better prospects for that year were largely obliterated by the virus.
Because of this, any expected recovery could be delayed for a further period, and that means only one thing – worse economic conditions in the euro area for as long as the virus continues to affect the Chinese economy and global supply chains.
Poor prospects have a negative impact on the euro as well. We expect the depreciation of the single currency to continue at a slow pace in the coming months.