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Germany: No cooldown

Sep 24, 2010

The further slight increase in the Ifo business climate suggests that the German economy is not set to cool down significantly. Although business expectations slipped slightly in September for the second month running, this is not unusual in the course of an upswing. The better the situation is deemed to be, the less a further marked improvement is expected.

Companies are now very upbeat about the business situation. Over the last ten years the assessment of the business situation was only slightly more positive than it is now from late 2006 to early 2008. The retail sector in particular regards the situation as very good, substantially better even than in the upswing years 2006/2007.

The marked improvement on the labor market is evidently encouraging consumers to open their wallets. This is bolstering the domestic economy and helping to offset the weaker impulses from foreign trade. Overall, third quarter gross domestic product is likely to rise by 0.5% on the second quarter. This means that the German economy is no longer expanding as fast as in the first half of the year, but the upswing remains on track.

Dr Rolf Schneider

Tel.: 49 / 69 / 2 63 – 5 77 90

e-mail: [email protected]

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Germany: No cooldown