Germany’s economy appears to have shrugged off the Volkswagen scandal and the Paris attacks, with rising spending and steady confidence among leading managers.
That is the picture from key economic indicators, in particular the Ifo index issued by Munich's leading economic institute, which quizzes 7,000 managers monthly about their current and future business prospects.
Despite looming risks, Ifo wrongfooted pessimistic analysts with news their index had risen slightly in November, not fallen, to 109 points.
Unaffected
“The German economy remains unaffected by growing uncertainty worldwide,” said Ifo president Hans-Werner Sinn in a statement. “Not even the Paris attacks had a negative impact on survey data.”
Both the current prospects and future prospects sub-indexes rose, the institute said, while the key manufacturing sector reached its highest level since March. According to the Ifo, German manufacturing companies will “ramp up production in the months ahead”.
Not even the crucial automotive sector sub-index showed signs of weakness, rising despite ongoing uncertainty over the cost of the diesel exhaust scandal for Volkswagen AG.
Others pointed out that 80 per cent of Ifo surveys had been taken before the November 13th Paris attacks, suggesting the negative impact might yet make itself felt. New statistics data released on Wednesday showed that the German economy had grown 0.3 per cent in the third quarter.
Domestic consumption
Chief drivers of growth are domestic consumption and large-scale state spending to house and feed the expected one million-plus asylum seekers arriving in
Germany
this year.
Throw in rising US exports and the economy had enough ingredients for an effective antidote against slumping demand from emerging export markets. Berlin expects economic growth to hit 1.7 per cent this year and 1.8 per cent next year.
“The overall conditions in Germany for economic activities of companies and consumers remain good so that the moderate economic upswing is likely to continue,” said the federal finance ministry.
