Germany: Cyclical resilience versus structural risks – ING
ING’s Carsten Brzeski highlights that Germany’s IFO index has risen for five consecutive months, pointing to a cyclical rebound and unexpected resilience in the German economy.
ING economist Carsten Brzeski points out that Germany's IFO index has increased for five straight months, indicating a cyclical recovery and surprising strength in the German economy. He attributes this growth to fiscal stimulus and growing order books, but stresses that this is not yet a structural recovery due to various risks and political uncertainty.
The ING forecast predicts a modest 1% growth in German GDP this year. The German economy has unexpectedly shown resilience, with its leading indicator, the Ifo index, reaching its highest level in over a year, standing at 89.9 in September, up from 88.8 in August. Recent months have seen order books recover, signaling positive momentum in industry, and government fiscal stimulus in defense and infrastructure is starting to impact the economy.
Looking forward, Germany faces several risks including the ongoing Middle East conflict, high oil prices, potential gas price hikes, and renewed trade tensions. Despite these risks, the strong first half of the year has positioned the economy for its best growth since 2022. ING now anticipates a 1% growth for German GDP this year.
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