Germany’s economy has hit a new high post-reunification, driven by strong recovery of its exports. The Ifo Business Climate Index – a key indicator of economic development in Germany, had hit a 20 year high of 109.3 in November. In December, the Ifo Institute for Economic Research Index scaled a new high of 109.9. The good news is that despite the gloom in the European Union, Germany is booming and helping the region fight the crisis.
Ifo Institute President Hans-Werner Sinn downplayed a small dip in the manufacturing index saying “This is solely the result of a slight worsening in the business expectations; the business situation is just as good as in November. Stronger stimulus is expected from exports, and the firms are planning to hire additional staff”.
He added that the confidence among wholesales and retailers have increased as well.
Analyst’s came out in support of Mr. Sinn. Andreas Scheuerle at Dekabank said: “It’s like a Christmas carol: The German economy is truly in top form. You can see that reflected with the further increase in the business conditions but also with the fact that expectations have risen again. The debt crisis and the end of stimulus measures don’t seem to be affecting German companies at all”.
The strong business confidence will drive the entire economy, explain analysts. “At this level, the Ifo points to very strong annual GDP growth of around 6% – far better than the third quarter’s 3.9%, implying that the recovery has further to run”, concluded Ben May – analyst at Capital Economics.
Germany is indeed an exception in the EU region where most economies have either stagnated or growing at snail’s pace.