Advance results of the Ifo World Economic Survey (WES) of 3rd quarter 2014
Ifo Economic Climate in the Euro Area Clouds Over
Aug 6, 2014
The Ifo Index for the economic climate in the euro area fell from 123.0 points to 118.9 points in the third quarter. While assessments of the current economic situation remained unchanged at a low level, the six-month economic outlook deteriorated significantly. The experts surveyed fear rising energy prices and falling exports due to the Ukraine conflict.
In most euro area countries slightly improved assessments of the economic situation in the second quarter returned to the low level seen at the beginning of the year. In Finland and Estonia, in particular, both of which do a great deal of business with Russia, the economic situation deteriorated significantly. Ireland, the Netherlands and Austria were the only countries where the present economic situation improved slightly, but remained at a subdued level. Germany stands out thanks to its very good economic situation.
Although the six-month economic outlook for the euro area remains at a high level, it is less optimistic than the previous quarter.
In Greece, Italy, Portugal, Spain and Slovenia economic experts continued to report constrained access to bank credit for companies, even although these constraints were perceived to be slightly less restrictive than in January. In Germany, by contrast, access to credit was not restrictive.
The forecast inflation rate has been falling steadily since the end of 2012. It now lies at 1.2 percent for 2014, which is too low for the liking of the European Central Bank. In this environment, experts expect short-term interest rates to remain at their present low level for the next six months. As in previous surveys, only a few experts expect an increase in long-term interest rates over the next six months.
Prof. Dr. Dr. h.c. mult. Hans-Werner Sinn
Präsident a.D. des ifo Instituts
Dr. Gernot Nerb
Ifo Center for Industrial Organisation and New Technologies