It’s party time for the German economy
The IFO Business Sentiment Index is one of the most reliable gauges for the shape of the German economy. In May 2017 a level of 123.2 was reported for current business conditions, thus marking the highest reading since re-unification. A surprise? Hardly. The German economy is currently operating under very favorable conditions. Global demand is robust. Interest rates, which might be about right for economically weaker Eurozone members, are too low for Germany's position in the business cycle. Meanwhile, the Euro is trading weakish, and fiscal policy is not restrictive, either. Hence it's party time for the German economy. It remains to be seen whether the party will be followed by a hangover. Stay tuned!
Sources: Bloomberg Finance L.P., Deutsche Asset Management Investment GmbH, as of 5/24/17
