Thursday, February 23, 2012

German Ifo defies recession fears

Did anyone say recession? Today’s Ifo index provides further evidence that the German economy only made a short stopover at the end of last year. In February, the Ifo index increased to 109.6, from 108.3 in January. The current assessment increased to 117.5, from 116.3 and expectations were also up (102.3 from 100.9).

After the first growth contraction since the end of the recession, concerns have increased that the German economy could enter a technical recession. The statistical carry-over effect from a weak month December worsened the starting position and the record high fuel prices could weigh on private consumption. At the same time, however, solid economic fundamentals, recent indicators and – despite all long-term worries – this week’s almost Greek deal bode well for at least a stabilization of the German economy.

Today’s Ifo index provides further evidence that the economic contraction at the end of last year was only a brief stopover. Austerity measures in the rest of the Eurozone and the February freeze: it looks as almost nothing can shatter German business optimism. At least some good news for the Eurozone.

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