Ifo suggest slow growth rather than stagnation in Germany

Data released earlier showed that German Ifo index, dropped to 105.7 in February, from 107.3 in January, the third decline in a row and the lowest reading since January 2015. It is worth noting that the current assessment component increased to 112.9, from 112.5 in January, indicating that it is fear rather than an already felt decline which is troubling German companies.

GDP data earlier today was also less optimistic. Despite the strong labour market, low inflation, low oil prices and higher wages, private consumption growth slowed down in the final quarter. For the time being, solid domestic activity should avoid any real negative surprises. Growth on the back of the public sector, consumption and construction activity might shield the German economy from external headwinds.

"The third decline in a row of the Ifo index indicates a soft patch in the German economy. With the ongoing weakness in emerging economies and the various European topics there are simply too many factors weighing on companies' expectations. We consider slow growth as more likely than stagnation or recession." said Nordea Research.