- Hans-Werner Sinn, Ifo's president
Business confidence in Germany, the Euro zone's biggest economy, improved more than predicted in July as concerns over Greece have subsided, suggesting a solid growth in the German economy this year. According to the Ifo think-tank, the business climate index climbed to 108.0 this month, up from a revised 107.5 in June and compared with economists' median forecast of 107.5. The data is based on a monthly survey of around 7,000 companies in manufacturing, construction, wholesaling and retailing industries, which are asked about their assessment of the current situation and their business expectations for the next six months.
The German central bank said in its July monthly bulletin that "strong" rises in factory orders during April and May, especially from overseas, point to a revival in the German economy in coming months. The outlook may also be supported by the Euro area's deal to provide Greece with a third bailout, averting the country's default and potential exit from the single currency. Yet, there are risks to the German economy down the road, including longer-than-expected periods of weakness of the US and the Chinese economies, both of which are top German export destinations, and a possible new flare-up of the Greek crisis.
© Dukascopy Bank SA