High Ger­man busi­ness morale de­fies China woes, VW scan­dal

Kuwait Times - - BUSINESS -

BERLIN: Ger­man busi­ness morale rose in Novem­ber to the high­est level since sum­mer 2014, shrug­ging off an eco­nomic slow­down in China, the Volk­swa­gen emis­sions scan­dal and the Is­lamist at­tacks in Paris. The un­ex­pect­edly strong busi­ness cli­mate read­ing by Ifo came af­ter Sta­tis­tics Of­fice data on Tues­day showed that ris­ing pri­vate consumption and higher state spend­ing on refugees more than com­pen­sated for weak­ness in for­eign trade in the third quar­ter.

“The Ger­man econ­omy re­mains un­af­fected by grow­ing un­cer­tainty world­wide. Not even the Paris at­tacks had a neg­a­tive im­pact on sur­vey data,” the Mu­nich-based Ifo eco­nomic in­sti­tute said in a state­ment. Data from the Fed­eral Sta­tis­tics Of­fice ear­lier showed strong pri­vate consumption and higher state spend­ing on refugees helped the econ­omy to grow at a mod­est, al­beit slower, pace of 0.3 per­cent in the third quar­ter.

Ifo’s busi­ness cli­mate in­dex, based on a monthly sur­vey of some 7,000 firms, jumped to 109.0 from 108.2 in Oc­to­ber. It was the strong­est read­ing since June 2014 and beat the Reuters con­sen­sus forecast for a read­ing of 108.2.

A sep­a­rate in­dex mea­sur­ing cor­po­rate expectations over a half-year hori­zon jumped to 104.7, suggest­ing many firms be­lieve they can cope with the eco­nomic head­winds.

“Nei­ther the VW emis­sions scan­dal, nor the refugee cri­sis, nor the at­tacks in Paris are scratch­ing the mood of Ger­man com­pa­nies,” Dek­a­Bank econ­o­mist Andreas Scheuerle said, adding that Ger­man busi­ness morale was like a “te­flon-coated pan”.

Ifo econ­o­mist Klaus Wohlrabe told Reuters that Ger­man consumption con­tin­ued to per­form well while ex­port expectations re­mained pos­i­tive, adding that a sub-in­dex for the au­to­mo­tive sec­tor con­tin­ued to rise de­spite the VW emis­sions scan­dal. Nordea Bank econ­o­mist Hol­ger Sandte said strong de­mand from the United States and Bri­tain helped Ger­man ex­porters com­pen­sate for weaker sales to China, Rus­sia and other emerg­ing mar­kets. “Ger­man growth re­mains ro­bust, the re­cov­ery con­tin­ues,” Sandte said.

US BOON

Ex­ports to the United States and Bri­tain surged in the first three quar­ters of this year, help­ing com­pa­nies to shrug off wan­ing de­mand from China and Rus­sia.

Fit­ting into this pic­ture, the VDMA engi­neer­ing as­so­ci­a­tion said on Mon­day the United States dis­placed China as Ger­many’s top ex­port mar­ket for ma­chin­ery in the first nine months.

Record-high em­ploy­ment, ris­ing wages and nearly stable prices are boost­ing house­hold spend­ing in Ger­many while cheaper gaso­line is free­ing up some cash for other pur­chases.

At the same time, the fed­eral gov­ern­ment and states are spend­ing bil­lions of eu­ros on hous­ing a record num­ber of refugees as well as on in­te­grat­ing them and find­ing them jobs.

Higher state spend­ing on refugees will help boost growth in the com­ing quar­ters also, Dek­a­Bank econ­o­mist Scheuerle said, not­ing, how­ever, that weak in­vest­ment by Ger­man com­pa­nies re­mained a prob­lem for the econ­omy.

Pub­li­ca­tion of the strong Ifo in­dex fol­lowed the closely watched ZEW sur­vey showed last week that morale among Ger­man an­a­lysts and in­vestors im­proved more than ex­pected in Novem­ber de­spite the at­tacks in Paris.

In ad­di­tion, a sur­vey among pur­chas­ing man­agers pointed to ac­cel­er­at­ing growth in the pri­vate sec­tor in Novem­ber. The gov­ern­ment expects strong pri­vate consumption and higher state spend­ing on refugees to drive eco­nomic growth of 1.7 per­cent this year and 1.8 per­cent next. — Reuters

ATHENS: A res­cuer stands in front of parked am­bu­lances out­side the Health Min­istry in Athens yes­ter­day dur­ing an anti-aus­ter­ity protest, to de­mand funds to ad­dress de­fi­cien­cies and gaps in the health sys­tem. The ban­ners read ‘na­tional free health sys­tem’ and ‘help’. — AFP

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