- Johannes Gareis, economist at Natixis
German business morale fell for a fourth consecutive month, indicating weak Euro zone's economy that the ECB President Mario Draghi says might require more stimulus measures. The Ifo institute's business climate index, based on a survey of 7,000 executives, dropped to 106.3 in August from 108 in July, hitting the lowest level for more than a year, as Europe's number one economy continues to lose steam. Ifo calculates the headline index on the basis of firms' assessments of current business conditions and the outlook for the upcoming six months. The sub-index measuring current business slid to 111.1 from 112.9 a month earlier, while the outlook sub-index slipped to 101.7 points, the lowest level since May 2013.
Nevertheless, the German government remains optimistic in its outlook for Europe's biggest economy, despite a contraction in activity in the second quarter. Finance Minister Wolfgang Schaeuble believes that for the whole year of 2014, the German economy could even notch up faster growth than the 1.8% it is currently predicting. German gross domestic product fell last quarter for the first time in more than a year. In contrast, Bundesbank has warned that a previously anticipated rebound in the second half of the year is now in doubt amid escalating international sanctions against Russia and fall in German exports to the country.
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