The German economy, Europe’s biggest, stands rock solid in the current stormy global economic seas, with growth picking up, confidence on the rise and its public finances firmly in the black, data showed on Tuesday.
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“We’re following the situation in China very closely”. The index will probably fall to 107.6 from 108, according to a Bloomberg survey of economists, highlighting the perceived risks to the nation’s upswing. One option would be to cut interest rates to encourage people to borrow and spend money, but in most Western countries interest rates have been at or around zero for a while. The current strength of exports stems from those to the 28 countries of the EU.
Earnings by German companies have been exceeding expectations, though they are concerned about the uncertain global outlook.
Responding to the Ifo survey, the business leaders also seemed to shrug off the renewed political uncertainty in Greece after Prime Minister Alexis Tsipras called for fresh elections next month.
The Tokyo-based Nikkei index fell by 4.6 percent in morning trading to below 19,000 points – its lowest point in the last five months.
Battered mining and technology stocks were the big winners from China’s move to support its stuttering economy and a plunging stock market that has sent shockwaves around the globe. The world’s second-largest economy is a major market for German companies, but worries over a slowdown there were not widely felt in the survey, even though exports have already slowed somewhat.
“All those which have a particularly strong presence in China are likely to suffer losses in their profits in 2016”, said auto industry expert Ferdinand Dudenhoeffer. Gross domestic product rose 0.4 percent quarter-on-quarter, faster than the 0.3 percent expansion seen in the first three months of the year, final data from Destatis showed.
The German government is sticking to its forecasts for growth of 1.8 percent both this year and next, a senior official at the Economy Ministry, Jeromin Zettelmeyer, told Reuters.
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Separately, Germany announced a budget surplus of 21.1 billion euros ($24.26 billion) in the first half of the year on healthy tax revenue and a windfall from the sale of cellphone frequencies.
