The assessment of business expectations is, however, not yet so negative that it points to the start of a recession in Germany. Some key data for the German economy have in fact improved of late. The drop in commodity prices lowers company costs and boosts purchasing power. The lower external value of the euro boosts business competitiveness. It is pivotal now that the uncertainty in the businesss sector caused by the euro crisis does not increase further. The EU summit at the end of June needs to make genuine progress towards overcoming the crisis.
We still expect the German economy to grow by 1.0% in 2012. But the risks have risen substantially.