German executives optimistic over 'resilient' economy

Jill Petzinger
Jill Petzinger, Germany Correspondent, Yahoo Finance UK
The Cube office building being built near the main railway station in Berlin, Germany. Photo: Fabrizio Bensch/Reuters

Business sentiment among German executives perked up in November, according to the latest Business Climate Index from the Institute for Economic Research (Ifo).

Based on a survey of some 9,000 managers, the economic think tank’s monthly barometer rose by 0.3 to 95.0 points this month from October, as business leaders feel the outlook for the coming six months is getting better.

"The German economy is resilient," Ifo president Clemens Fuest said on Monday.

Europe’s largest economy narrowly avoided falling into a technical recession in the last quarter, posting GDP growth of 0.1% quarter-on-quarter last week, driven by robust private and public domestic consumption.

However, Carsten Brzeski, chief economist of ING Germany warned that today’s Ifo index is still not back at its July level. “It is part of Germany’s new economic modesty to appreciate a tiny increase in the Ifo index. Better than another disappointment,” Brezski said in a note.

“While today’s Ifo index suggests that the economy, and above all, the manufacturing sector, could be in a phase of bottoming out, a sharp rebound is not yet near.”

READ MORE: German firms have not been this pessimistic since 2008

A survey last month from Germany’s Association of Chambers of Commerce (DIHK) found that German firms have not been as pessimistic about the future since the financial crisis of 2008-09, mainly because of trade conflicts, Brexit, and all-round cooling in global demand for their products.

The DIHK said it expected exports to stagnate in 2020, which, for an export-driven economy like Germany was a “huge challenge.” With the threat of recession hovering, calls for Berlin to get serious about fiscal stimulus can be expected to grow louder.