Carsten Brzeski from ING believes that the slowdown of the German economy will result in increased calls for stimulus, but even though Chancellor Angela Merkel has not rejected it entirely “with the constitutional debt brake starting in 2016 and probable tensions within the government on how to spend it, any new stimulus should remain very limited.”
The analyst also emphasizes that the Ifo index results published today could be variously interpreted: “The sharp drop in the current assessment component is a clear sign that the economy has entered contraction territory. Stabilised expectations, however, give hope that any contraction will not feel like a recession.”
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