— Carsten Brzeski, ING
The mood of German investors improved markedly in May, official data showed on Tuesday. The Munich-based Ifo Institute for Economic Research reported that its Business Climate Index climbed to 114.6 points in the reported month, following April's 113.0 and surpassing analysts' expectations for an increase to 113.1. That marked the strongest reading since 1991. May's jump was mainly driven by Emmanuel Macron's victory in the French 2017 Presidential Election, which boosted confidence across the Euro zone. Taking into account the stronger-than-expected Ifo Index and other quite optimistic economic data, the German economy is set to hit a 0.6% growth rate in the second quarter. The Ifo Institute's economist Klaus Wohlrabe noted that Brexit and the US President Donald Trump's policies had not had an impact on the German economy yet. The largest sentiment improvement was seen in the manufacturing sector. Strong economic growth is expected to provide a significant support to the Chancellor Angela Merkel's Party ahead of the September General Election.
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