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Lower German business morale

July 25, 2016

Despite a slight drop in expectations among German businesses, the economy in Europe's powerhouse remains resilient as the latest Ifo barometer has shown. Brexit and other worries can wait.

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German business confidence fell only marginally in July, the latest report by the Munich-based Ifo economic research institute revealed.

The monthly index based on a survey of about 7,000 companies, dropped to 108.3 points from 108.7 points in the previous month.

["The slight drop] was due to less optimistic business expectations on the part of companies," Ifo President Clemens Fuest said in a statement. "Assessments of the current situation, by contrast, improved slightly; the bottom line is the German economy proves resilient."

Engine not sputtering

Fuest told reporters on Monday that the British decision to leave the European Union would cost the German economy 0.1 percent of gross domestic product in 2016, with the long-term impact of the move hard to gauge.

"We've seen this in the past few weeks - German companies have reacted to the pro-Brexit vote with a lot ease," Dekabank economist Andreas Scheuerle told Reuters.

KfW analyst Jörg Zeuner agreed that the Brexit scenario, terror attacks and recent developments in Turkey have not had a devastating effect on the German economy.

"While there's no lack of bad news and uncertainty arising from it, economic growth is not in danger because of strong domestic demand in Germany," Zeuner predicted.

hg/sri (AFP, Reuters)