Ifo Export Climate for March 2014
Export Climate Overshadowed by Deterioration in Competitiveness
The Ifo Export Climate fell in March to 0.14 points from 0.22 points in February. This was due to the marked deterioration in Germany’s price competitiveness.
Sentiment among companies and consumers improved overall compared to the last two months. The impetus was particularly strong from the Netherlands, where firms and households were clearly more optimistic than last month. Caution on the part of companies in Great Britain, by contrast, had a dampening effect on the export climate, which was partially offset by a rise in consumer confidence. As in previous months, there were no noteworthy impulses for the export climate from Asia. The optimism of Chinese companies in particular remains subdued. This is probably due to the fact that Chinese manufacturing is threatened by overcapacity, which is prompting the government to use economic policy to hamper investments that are often inefficient (see the current Joint Economic Forecast for further details, p. 21).
Although sentiment indicators for Greece have a very small weighting in the indicator, corporate sentiment has nevertheless picked up very sharply over the past two months. Although Greek corporate confidence remains historically low, it returned to the level of August 2008 for the first time in March.
Germany’s price competitiveness deteriorated both versus February and compared to the same month last year. This was mainly due to a stronger appreciation of the euro against the US dollar in March. It represented a continuation of the trend towards a steady appreciation of the euro that began last summer.
The Ifo Export Climate gauges company and consumer confidence and is an indicator for the price competitiveness of German companies versus 37 trade partners based on consumer price indices. Indicators from 41 countries, weighted by German export figures, are used to assess company and consumer confidence. The countries surveyed account for 90 percent of Germany's export markets and seasonally-adjusted figures are used to calculate the Ifo Export Climate. Price competitiveness comes into play in the log differences. The weightings given to price competitiveness and the world economic climate in the Ifo Export Climate are 0.12 and 0.88 respectively.
The Ifo Export Climate is calculated exclusively for the WirtschaftsWoche.