German businesses upbeat, shrug off Ukraine worries

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German businesses upbeat, shrug off Ukraine worries

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It seems German firms are becoming reconciled to the tensions between the West and Russia over Ukraine and do not think that will have a major effect on their growth.

As a result the business climate index issued by the Ifo think tank was up in April,. signalling that Europe’s largest economy is on track for solid expansion this year.

The index had slipped last month as companies among the 7,000 that are surveyed by Ifo cited worries about the Ukraine situation.

“Ukraine is still a factor but the positive general mood prevails. The German economy is in very good shape,” said Ifo economist Klaus Wohlrabe. “The uncertainty seen in March has not yet taken hold.”

An escalation would have a major effect on the German firms operating in Russia. Germany receives more than a third of its gas and oil from Russia and more than 6,000 German firms are active there.

“The situation in eastern Ukraine remains volatile and dangerous and poses the most serious risk to the euro zone recovery at the moment,” said Christian Schulz of Berenberg Bank.

“But German businesses seem to estimate that the worst-case scenario of a war between Russia and Ukraine and escalating sanctions all the way to disruptions of Russian energy supplies to Europe remains unlikely.”

with Reuters