German business managers are shrugging their shoulders at
rising political risks in the Ukraine. The jump in Germany’s IFO index in April
reflects growing confidence in the domestic economy and optimism that the
German economy is going from strength to strength. Unemployment is falling,
consumer confidence is on the rise and the stronger business climate reflects
the very easy monetary policy climate set by the ECB. Low interest rates are
there to help the distressed Eurozone economies, but it is giving a huge boost
to business sentiment in Germany. German business would be wise to take heed of
the deteriorating political situation in the Ukraine. It has been a major
factor reflected in Germany’s ZEW business confidence index. The prospect of a
civil war in Germany’s eastern back yard would be potentially catastrophic for
German business prospects ahead. But so far, bounding domestic optimism is
completely outweighing any external risks.
The Munich-based Ifo think-tank's business climate index, based on a monthly survey of some 7,000 firms, increased to 111.2 from an unrevised 110.7 in March. Expectations in a Reuters poll of 40 economists had been for a fall to 110.5.
Key data
Germany April 14 March 14 April 13
Business Climate 111.2 110.7 104.3
Business conditions 115.3 115.2 107.2
Business expectations 107.3 106.4 101.4
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