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%.’