Dec MNI analysts survey Nov Oct
median range
————————————————————————
Business sentiment: 107.2 106.2 105.0 – 106.9 106.6 106.4
Current conditions 116.7 116.4 115.5 – 116.7 116.7 116.7
Six-month outlook: 98.4 97.3 96.3 – 97.5 97.3 97.0
—

FRANKFURT (MNI) – Business sentiment in Germany continued to
demonstrate surprising strength in December, rising for the second
consecutive month, as respondents grew more optimistic regarding their
short-term outlook and the current situation remained “favourable”, the
Ifo institute reported on Tuesday.

Since its surprise recovery in November, the headline figure gained
an additional 0.6 point to 107.2 to its highest level since September
and above all analysts’ forecasts.

“The German economy seems to be successfully countering the
downturn in western Europe,” Ifo President Hans-Werner Sinn said in a
press release. “This bodes well for Christmas.”

The current conditions index was unchanged at 116.7, matching the
most optimistic forecasts. Expectations overshot all projections, rising
to a four-month high of 98.4.

Despite the ongoing recovery in German business sentiment, the
ongoing debt crisis and the uncertain global economic climate continue
to weigh on growth prospects, as evidenced by the latest PMI report, in
which respondents blamed the further deterioration in new orders on
clients putting off spending decisions.

The ZEW’s economic sentiment indicator painted a similar picture in
December, as most investors polled expected economic activity to slow in
the short term.

“Financial market experts’ uncertainty due to the debt crisis in
the Eurozone has already been reflected by the negative balances of the
ZEW indicator of economic sentiment in the previous months,” ZEW noted.

Ifo expects German GDP growth to slow sharply to 0.4% in 2012 after
3.0% this year, as private consumption, investment and exports all lose
steam.

Slightly more optimistic, the Organisation for Economic Cooperation
and Development also sees growth decelerating next year to 0.6% after
3.0%.

“Economic activity is expected to recover gradually during 2012 as
uncertainty declines and trade picks up,” the OECD said in its autumn
Economic Outlook. “Growth rates may then rise above potential from
around mid-2012, given the absence of underlying imbalances in household
and corporate balance sheets and only moderate fiscal consolidation
needs.”

— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —

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