(Bloomberg) --
Investor confidence in the euro-area economy fell to its lowest level in nearly five years amid increased concern about a fully fledged trade war between the U.S. and China, according to Sentix.
The index fell to minus 13.7 in August, the lowest since October 2014, with gauges for current conditions and expectations both deteriorating. Germany, whose economy is highly reliant on exports, is suffering particularly badly, with a recession now being “inevitable.”
A trade dispute between the world's two largest economies just entered a new phase. Beijing responded to U.S President Donald Trump's threats of additional tariffs on Chinese goods by letting the yuan tumble to the weakest level in more than a decade and asking state-owned companies to suspend imports of U.S. agricultural products.
“Trump has once again poured oil into the fire” with his new China tariffs, Sentix Managing Director Patrick Hussy said in a statement.
Economic prospects for the 19-nation euro area weren't rosy even before the latest escalation on trade. The region's growth pace halved in the second quarter and prospects for inflation deteriorated, prompting policy makers at the European Central Bank to prepare more monetary stimulus.
To contact the reporter on this story: Kristie Pladson in Frankfurt at kpladson@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jana Randow, David Goodman
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