Germany on track for growth as confidence rises, says Ifo institute
The German economy is set to grow by 0.2 per cent in the second quarter, the country’s Ifo economic institute has predicted, as executives became slightly more optimistic in November.
However, it is too early to say the struggling German economy is turning around, with confidence falling in its important manufacturing sector, according to the latest Ifo sentiment survey.
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The German economy has struggled in 2019 as the US-China trade war, problems with the car industry, and Brexit uncertainty have weighed on growth.
The economy contracted in the second quarter, but increased consumer and government spending and a rebound in exports pushed it to growth in the third.
This trend continued in November, Ifo said, with optimism growing in the services and trade sectors.
“Traders were more satisfied with the current situation. The expectation index also rose markedly,” said Clemens Fuest, president of Ifo. “The signs are that business will be very good this Christmas.”
“Service providers were more satisfied with their current situation. After four months, their expectations have also departed negative territory.”
The overall Ifo business climate index picked up to 95 points in November from 94.7 in September.
“The German economy is showing resilience. The Ifo institute is expecting GDP growth of 0.2 per cent in the fourth quarter,” Fuest said.
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However, Ralph Solveen, deputy head of economic research at Commerzbank, said: “This is certainly not yet a strong signal of improvement, but the sentiment indicators seem at least to have stabilised.”
“This strengthens the hope that German economy will not go into a deep recession. However, there are no signs of an end to the current phase of stagnation yet.”