Carsten Brzeski, chief economist at ING, points out that German Ifo index plunged in January and registered its fifth consecutive drop as the Ifo index now stands at 99.1, from 101.0 in December.
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“The expectations component took a particularly severe hit.”
“Looking at the sector level, manufacturing lost much more momentum than the services sector. Needless to say that cars play an important role in this development. Still, both confidence in the manufacturing and the services sector are still above historical averages.”
“The manufacturing sector has been on a downward trend since last August, dragging the entire economy down. In fact, the German economy is currently suffering from a strange and also unique combination of homemade one-off factors such as the delayed introduction of new emission standards in the automotive sector or low water levels which prevented dropping global oil prices from reaching consumers but also a series of external uncertainties.”
“Looking ahead, today’s Ifo index suggests that it could take until the second quarter before the German economy regains momentum, mainly on the back of investments, consumption and some relief from the global risk factors.”
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