Business Climate Improves Further in Germany, but Coronavirus Impact Will Be Felt Later - Forex News by FX Leaders
The Eurozone economy seems to be improving slightly

Business Climate Improves Further in Germany, but Coronavirus Impact Will Be Felt Later

Posted Monday, February 24, 2020 by
Skerdian Meta • 1 min read
The business and investor climate deteriorated in the Eurozone and particularly Germany during last year, as the trade war hurt the manufacturing sector. The German Ifo business climate indicator bottomed out in September/October and it has started to improve slightly. Today’s report showed further improvement, but the coronavirus impact is yet to be felt. Below is the report.

  • Germany February Ifo business climate index 96.1 vs 95.3 expected
  • Prior 95.9
  • Expectations 93.4 vs 92.1 expected
  • Prior 92.9
  • Current assessment 98.9 vs 98.6 expected
  • Prior 99.1

The data beat expectations across the board as business morale improves for the month of February despite concerns surrounding the coronavirus outbreak. Ifo notes that the domestic economy does not seem to be affected by the virus situation. But, Ifo economist, Klaus Wohlrabe, thinks that the effect of the virus will be felt in the economy in the coming months.

  • Development of coronavirus epidemic not yet fully reflected in our survey
  • 1% less economic growth in China would shave just 0.1% off German growth
  • If virus becomes a pandemic, would be particularly hit due to reliance on exports
  • Industrial sector is reporting significant improvement in orders compared to 2019
  • New orders have come in and domestic demand is picking up

Wohlrabe certainly sounds confident about how things are playing out but I reckon it is still too early to quantify the actual impact that the virus outbreak will have – not just on China, but to other major economies around the globe – for now. Meanwhile, EUR/USD is back down near the lows, after a retrace higher at the end of last week, so the downtrend continues for this pair.

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