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Business confidence improves despite rising interest rates

Date: March 26, 2023 Time: 14:41:19

The prospects for employers for the first quarter of 2022 are positive. This Wednesday the analysis of the Munich Institute for Economic Research (Ifo) was released, which improved the forecasts by two points compared to those released in December. The index prepared by the German institute stands at 90.2, which marks the best data since June. An impulse that is in line with the forecasts released in Spain, given that the INE’s Harmonized Business Confidence Index has estimated that the economy will grow by 1.4% in the next three months compared to the result of the fourth quarter of 2022.

This horizon is especially hopeful in a context due to the decision of the European Central Bank to continue raising interest rates until the inflammation was marked below 2%. The normalization of monetary policy has managed to raise rates by 250 basis points in less than a year, which has meant an added challenge for the national economies, but which the president of the ECB, Christine Lagarde, has considered essential to curb the general rise in prices given by the energy crisis.

Precisely, Germany is one of the countries that has been hardest hit by inflation. The German economy closed December with a moderation of the CPI data, since it stood at 7.9% after reaching 10% in November. However, as in Spain, the underlying inflation data does not let up and in the case of the country ‘led’ by Olaf Scholz it borders on two figures. Although the outlook for the industrial sector has especially improved in both countries, both the German and Spanish institutes have raised confidence in the sector by three and a half points.

Another positive sign for the first quarter is that employment has not suffered. In Germany, the number of people who had an employment contract at the end of the year was a record and exceeded pre-pandemic levels by bringing together more than 45 million workers. While in the last month of 2022, in Spain the labor market added 12,640 employees, after growing by close to half a million throughout the year. A phenomenon that has also occurred in the United States that created 223,000 jobs in December despite the rate hikes dictated by the Federal Reserve.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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