High German business confidence points to strong end-of-year growth

Chris Papadopoullos
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The German economy is expected to end the year strongly (Source: Getty)

The German economy is expected to make a strong start to 2016 after a survey published this morning showed businesses were in a confident mood.

The business climate index compiled by the Munich-base IFO Institute edged down slightly to a score of 108.7 points this month from 109 in November. Despite the marginal dip, it remains at relatively buoyant levels, with 100 marking the average score in 2005. Expectations of future business conditions remained at their highest since 2014.

Sentiment in the German service sector hit a new record high of 33.7 points.

Read more: German growth slows in third quarter

“The economic situation could hardly be better in the run-up to Christmas,” the IFO Institute said.

“Steady as she goes as external risks recede a littlethis is the major message from German Ifo business climate,” said Holger Schmieding, chief economist at Berenberg Bank.

“This fits our view that, after a modest dent in the second half of 2015, German GDP growth will reaccelerate to its trend rate of roughly 1.8 per cent over the course of next year.”

“For next year, we expect steady gains in demand from other European countries and the US, a lessening of tensions in some emerging markets and a domestic fiscal stimulus of at least 0.5 per cent to support Germany’s cyclical outlook.”

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