German business confidence stable in April | 2016-04-26 |

German business confidence stable in April

    26 April, 2016 12:00 AM printer

FRANKFURT: German business confidence held stable in April as the positive mood in Europe’s biggest economy prevails despite global uncertainties, the Ifo economic institute said on Monday.
The Ifo institute’s closely-watched business climate index eased to 106.6 points in April from 106.7 points in March, Ifo said in a statement.
Analysts had been expecting a modest increase in the index this month, reports AFP. Nevertheless, “the mood in the German economy remains positive,” said Ifo president Clemens Fuest.
“Although companies were somewhat less satisfied with their current situation, their business expectations brightened once again. The moderate upturn in the German economy continues,” Fuest said.
Ifo calculates its headline index on the basis of companies’ assessments of the current business environment and the outlook for the next six months.
The sub-index measuring current business fell by 0.6 point to 113.2 points, while the outlook sub-index climbed by 0.4 point to 100.4 points, the institute said.
The latest Ifo reading “adds to latest hopes that the widely-feared sharp global slowdown is not happening. At least the German economy is showing solid resistance,” said ING DiBa economist Carsten Brzeski.
Nevertheless, under the surface of solid hard data, “a more worrying picture is emerging,” the expert cautioned.
“While the economy is still running smoothly, economic issues together with the refugee crisis could become the decisive topics at next year’s national elections.”
Germany took in more than one million asylum seekers last year amid growing concerns about how quickly they can be integrated into the labour market.
All in all, while the Ifo data suggested that German businesses had shaken off fears of long-lasting global slowdown, “real deep-seated optimism remains elusive,” Brzeski said.
Capital Economics economist Jennifer McKeown also predicted that “growth in the eurozone’s largest economy remains pretty sluggish.”
Natixis economist Johannes Gareis said he expected German gross domestic product (GDP) to grow by just 0.3 percent in the second quarter after 0.5 percent in the first quarter, “in line with the subdued business sentiment.”
LBBW economist Uwe Burkert similarly felt that “growth will likely be less dynamic in the second quarter than in the first.”
Nevertheless, “the Ifo index is not flagging up any particular risks. The temporary weakness in the global economy is being offset by domestic demand,” he said.