Latest economic index shows more gloom

The mood in the German economy dipped again in September, according to the latest index published by the Munich-based Institute for Economic Research (Ifo). But the figures are not as bad as feared.

Latest economic index shows more gloom
Photo: DPA

Ifo’s monthly index, based on a survey of 7,000 German companies, sank from 108.7 points to 107.5 points, the institute announced on Monday. That suggests business confidence is still falling, but some analysts had been expecting a two-point drop to 106.6 points.

The internationally-respected index has now dropped three months in a row, in the face of the ongoing debt-crisis in the eurozone and weakening growth. Economists usually see three consecutive negative results as a definite “trend” in economic development.

Ifo’s survey found that on average, 7,000 company managers in the construction, retail and industry sectors see their prospects for the next six months negatively, and also see the current situation as worse than before.

Ifo chief Hans-Werner Sinn said the “continuing favourable situation of companies shows that the German economy has so far managed to remain independent from political turbulence.”

But analysts were not so sure. “September’s modest decline in the German Ifo is a relief after larger falls in other survey indicators, but it remains clear that German economic activity is slowing very sharply,” said Jennifer McKeown, senior European economist at Capital Economics.

Carsten Brzeski, senior economist at ING Belgium, agreed. “Recent financial market turmoil and the never-ending eurozone sovereign debt crisis have befogged the outlook for the German economy,” he said. “The risks for the German economy have increased lately and today’s drop in the Ifo expectation component is a serious warning.”

Other economic indexes have delivered similarly poor figures recently. The latest index from the Centre for European Economic Research (ZEW) last week gave its lowest figures since December 2008. Many economists now fear that the world economy will shrink for the first time since 2009 in the fourth quarter of this year.

But the German Federal Bank and the Finance Ministry both maintain that Germany won’t fall into a recession. Most economic institutes are expecting a three-percent growth for the whole of 2011, but only one percent in 2012.

The Local/AFP/bk

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Italy expands €200 payment scheme and introduces public transport bonus

Italy's government will extend its proposed one-time €200 benefit to more people and introduce a €60 public transport payment, Italian media reported on Thursday.

Italy expands €200 payment scheme and introduces public transport bonus

Seasonal workers, domestic and cleaning staff, the self-employed, the unemployed and those on Italy’s ‘citizens’ income’ will be added to the categories of people in Italy eligible for a one-off €200 payment, ministers reportedly announced on Thursday evening.

The one-time bonus, announced earlier this week as part of a package of financial measures designed to offset the rising cost of living, was initially set to be for pensioners and workers on an income of less than €35,000 only.

However the government has now agreed to extend the payment to the additional groups following pressure from Italy’s labour, families, and regional affairs ministers and representatives of the Five Star Movement, according to news agency Ansa.

Pensioners and employees will reportedly receive the €200 benefit between June and July via a direct payment into their pension slip or pay packet.

For other groups, a special fund will be created at the Labour Ministry and the procedures for claiming and distributing payments detailed in an incoming decree, according to the Corriere della Sera news daily.

One new measure introduced at the cabinet meeting on Thursday is the introduction of a one-time €60 public transport bonus for students and workers earning below €35,000. The bonus is reportedly designed to encourage greater use of public transport and will take the form of an e-voucher that can be used when purchasing a bus, train or metro season pass.

Other provisions reportedly proposed in the energy and investment decree (decreto energia e investimenti), which is still being adjusted and amended, include extending energy bill discounts, cutting petrol excise duty and rolling on the deadline to claim Italy’s popular ‘superbonus 110’.

The €14 billion aid package, intended to lessen the economic impact of the war in Ukraine, will “fight the higher cost of living” and is “a temporary situation”, Prime Minister Mario Draghi has said.

The Local will report further details of the payment scheme once they become available following final approval of the decree.