Germany’s growth has been boosting the Eurozone’s economy for years, but lessening export demand and numerous other strains may finally impact the region’s largest economy this quarter.
The Ifo Business Climate index has been keeping tabs on Germany’s economic health. It reveals a slide from 109.9 in April to 109.4 this month, after a run of six consecutive gains this year.
“The Ifo survey has been particularly optimistic lately and rose to a level consistent with annual GDP growth of 2 percent or more in April. But the index rose by a marginal 0.1 points in both March and April, suggesting that sentiment might have reached a turning point,” Capital Economics’ Jennifer McKeown wrote.
“With the situation in Greece edging close to crisis point and demand from outside the Eurozone slowing, we expect the Ifo measures of current activity and expectations to have fallen this month…a decline this month may well be a sign of things to come,” she continued.
However, consumer confidence is projected to remain steady. Most likely a result of higher wages and increased spending, this fact will undoubtedly provide much-needed support as Germany faces its upcoming challenges.
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