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Upbeat outlook ahead for 2017, says Germany's IFO

Friday, December 16, 2016 - 01:47

Germany's influential IFO institute seals a week of positive data from the euro zone data with an upbeat outlook for its largest economy. Germany will rebound more strongly in Q4, it says, and its growth momentum will follow through into 2017. David Pollard reports.

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Thomas Jeromin has over one hundred Christmas trees in his house in the German town of Rinteln. And why not - he can probably afford them. With record employment, rising wages and low borrowing costs - it's a bumper Christmas for the German consumer. The euro zone's biggest economy heading for a stronger rebound than expected in Q4. (SOUNDBITE) (German) IFO ECONOMY EXPERT, TIMO WOLLMERSHAEUSER, SAYING: "The robust albeit moderate upswing in Germany is expected to continue." That's this year - but next won't be too bad either, says Germany's influential IFO institute. 1.5 per cent growth pencilled in - an improvement on its previous forecast. As is - at 1.7 per cent - 2018. Though from a market vantage point, things could look different. SOUNDBITE (English) OANDA SENIOR MARKET ANALYST, CRAIG ERLAM, SAYING: "Whether it be Brexit, whether it be what's happening in the US, whether it be slower global trade, slower Chinese growth, or even a little closer to home ... we've got the German elections next year, there's French elections, Dutch elections - all these things can weigh on sentiment. And amid strong retail demand, inflation could perk up. If for the euro zone as a whole right now, it's going the other way. Latest official figures confirming a 0.6 per cent rate in November - down 0.1 per cent on the previous month. The IFO forecast 1.5 per cent next year for Germany. SOUNDBITE (English) OANDA SENIOR MARKET ANALYST, CRAIG ERLAM, SAYING: "We are seeing this reflationary trend start to appear in the global economy from a level of very low inflation ... but I don't people are overly confident that these levels are going to be achieved." From economists then, a reminder that all that glitters isn't always gold. Especially in a 2017 when - for the euro zone - so much hangs in the balance.