Morale among Germany’s business leaders rose unexpectedly in February, a survey showed today, as the manufacturing sector improved despite global fears over the coronavirus outbreak.
The Ifo Institute’s closely watched business climate index rose to 96.1 from 96 in January, beating predictions of a fall to 95.3.
Ifo president Clemens Fuest said that along with other indicators the survey result suggested the German economy would grow 0.2 per cent in the first quarter of 2020.
Germany’s economy struggled last year as the US-China trade war led to an international slowdown and a slump in demand for the European powerhouse’s industrial products.
There have been some signs of green shoots for Europe’s biggest economy, however. These were compounded by Ifo’s manufacturing index, which rose for the third month in a row in February.
“The German economy seems unaffected by developments surrounding the coronavirus,” Fuest said.
The cheerier outlook among Germany’s business leaders sharply contrasted with the gloomy view of international investors, who sold off stocks today as coronavirus spread in Italy, South Korea and Iran.
Joerg Kraemer, chief economist at Commerzbank, said the rise in the Ifo survey was surprising given the coronavirus outbreak.
“The coronavirus is expected to prolong the recession in German industry by a few months,” he said.
“In China, one week of massive production losses… lowers first-quarter GDP by two per cent compared to a situation without corona according to our calculation.
“In the meantime, three weeks have passed since the regular end of the New Year holidays, without the production having increased strongly again.”