German business and consumer confidence booming

Both German business and consumer confidence are booming, according to the findings of two influential surveys released on Thursday.

Business morale is at an all-time high — at least since such things were formally measured — says the Munich-based Ifo economic institute, while consumer confidence is at its highest point in almost 20 years according to the latest survey from market researchers Gfk.

The Ifo's monthly business confidence survey assesses the views of around 7,000 German-based executives and its latest findings show that the mood is as bright as ever in Europe's largest economy.

"The German economy made a dynamic start to the year," said Ifo boss Clemens Fuest on release of the figures, which match the previous record high set in November 2017.

In terms of consumer confidence, the mood is also buoyant, with the Gfk survey — which assesses moods regarding the future — finding that positive vibes around low unemployment and expectations of wage growth have led to the most hopeful figures in almost 20 years.

"The euphoria can be explained above all by the continuing excellent situation on the labor market," a GfK statement said.

Political parties won't spoil the party

"At the beginning of the new year, it's all hunky-dory in the German economy," was the immediate reaction of analyst Carsten Brzeski, an economist with ING-DiBa bank.

The good vibrations come despite the fact that the main German political parties have yet to form a government more than four months on from the federal election that was held in September. 

Chancellor Angela Merkel, whose CDU party lost 65 seats along with its Bavarian sister party in the election, has struggled to form a new coalition. Talks over a three-way alliance with the Free Democrats and the Green party failed, and considerable doubts remain over the prospects of the current attempts to broker some kind of deal with the SPD, the main opposition party.

Yet the Ifo and Gfk surveys clearly suggest the political uncertainty is having little impact on the economic mood in Germany.

The German economy remains the European powerhouse. It grew by a healthy 2.2 percent in 2017 and continues to post positive figures on most of the key indicators.

Brzeski said the biggest risks to the German economy will come ultimately from outside forces, particularly in the form of US tax reforms and various threats to free trade arrangements.

"New structural reforms and new private and public investments are needed to safeguard the currently strong domestic momentum of the German economy," he said.

aos/hg (AFP, dpa)