German business confidence has increased over the past month, according to the IFEU index. At the same time, analysts remain concerned about the turmoil in the financial markets. BNR’s in-house economist Han de Jong says the big question is whether the recent problems in the banks are “single incidents or if there is a common thread and whether more financial institutions have these problems.”
It is striking that the confidence of entrepreneurs has increased and that of analysts has decreased. The optimism of the entrepreneurs can be explained by the sharp drop in energy prices, which will benefit Germany’s intensive industry. According to De Jong, analysts are “slightly more driven by the turmoil in the financial markets that we have seen in recent weeks”.
“I fear there will be other problems”
In the short term, De Jong places more value on evaluating entrepreneurs, because “they are the economy.” But the situation in the financial world must not degenerate. So far, according to De Jong, the authorities have managed to prevent a chain reaction with decisive actions, but worries remain. “I’m afraid there will be more problems to come.”
Recession still coming
The European Central Bank (ECB) reported yesterday that business loans fell for the fourth straight month. According to De Jong, this is not a good sign. “If business investment falls, that can only mean that economic growth will also decline.” While De Jong doesn’t expect immediate problems, he doesn’t rule out the possibility that if this trend continues, ‘we’ll talk later in the year if we end up in a recession’.
The Central Bureau of Statistics is due to release March inflation flash data on Friday. De Jong expects a sharp drop from February’s 8 percent. ‘I hope we could end up just under that 5 percent. So all of a sudden we’re not talking about 8% or even higher inflation anymore, we’re talking about 4%.’
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
