Cyprus Mail

German economy better than expected, says Ifo

People sit at sunset, as the spread of the coronavirus disease (COVID-19) continues, at Mauerpark in Berlin

German economic institute Ifo revised its forecast for the German economy upward on Friday.

The institute raised its 2020 economic output forecast due to a “surprisingly positive development” in the past few weeks, Der Spiegel magazine reported on Friday, citing the institute’s chief economist.

Germany’s gross domestic product will likely shrink by 5.1 per cent this year, Ifo’s Timo Wollmershaeuser was quoted as saying, revising a forecast of -6.7 per cent it had given a few weeks ago.

Ifo said on Monday that German business sentiment rose in July, beating forecasts and increasing for the third consecutive month.

“The German economy is recovering step by step,” Ifo said.

The Ifo business-climate index came in at 90.5 points in July from an upwardly revised 86.3 points in June. Economists surveyed by Dow Jones Newswires had forecast it at 89.0 points, according to MarketWatch.

Companies’ assessment of their current situation went up notably, rising to 84.5 points in July from 81.3 points in June. Expectations also leaped higher, the component rising to 97.0 points in July from 91.6 points in June, Ifo said.

Expectations for exports for the country that drives Europe’s economy improved sharply in July, as the border restrictions imposed by the novel coronavirus pandemic are being lifted.

Vast numbers of German workers have been on furlough since the pandemic started. But The latest survey conducted by the Ifo institute showed on Thursday, that workers in the German countries, who have been on shortened working hours, are gradually reducing in the construction, services and retail sectors.

The Ifo survey showed: In July, 42 per cent of companies surveyed were still taking advantage of the Kurzarbeit (shortened working time) furlough scheme, down from 46 per cent in June and 53 per cent in May.

The Ifo index is based on a poll of about 9,000 companies in manufacturing, services, trade and construction.

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