BERLIN: German business morale hit its highest level in nearly six years in March, suggesting company executives in Europe’s largest economy are brushing off concerns about the threat of rising protectionism and Germany’s own election issues.
The surprisingly strong business climate index, published on Monday by the Munich-based Ifo economic institute, added to signs that the German economy is firing on all cylinders at the start of 2017. Ifo said its business climate index, based on a monthly survey of some 7,000 firms, rose to 112.3 from an upwardly revised reading of 111.1 in February.
“Wow! Nobody expected such a clear rise,” LBBW chief economist Uwe Burkert said. “The concerns about Brexit, Trump and the upcoming elections in France seem to have disappeared. But he added: “In my opinion, this carelessness is somewhat exaggerated.” Nordea economist Holger Sandte said the numbers were pointing to an overall economic growth rate of some 2 percent this year.
Businesses appeared to be completely unfazed by “Americaa First” protectionist rhetoric in Washington, European politics and even Germany’s own election cycle, which will decide later this year whether Angela Merkel remains as chancellor. “The political uncertainties don’t affect the German economy,” Ifo economist Klaus Wohlrabe said.
Ifo’s March business climate reading was the highest since July 2011 and it came in stronger than a Reuters consensus forecast for 111.0, surpassing even the highest forecast. “The upswing in the German economy is gaining impetus,” Ifo chief Clemens Fuest said in a statement.
