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According to Reuters, Germany’s leading economic institutes downgraded their growth forecasts for Europe’s powerhouse for this year and next, in response to weaker global manufacturing slowdown amid a trade war.

Key Findings:

Now expect the German economy to grow by 0.5% this year and 1.1% in 2020. This compared with their April estimates of 0.8% and 1.8% respectively.

An economic crisis with a pronounced underutilization of the German economy is … not in sight, although the cyclical downside risks are currently high.

For 2021, the institutes predict a mild recovery with an economic expansion of 1.4%.

The EUR/USD pair is seen fading its recovery momentum and tests the 1.09 handle amid a broad-based US dollar rebound, as the risk-off market profile boosts the safe-haven demand for the buck.