German Business Is So Bullish It Expects 6% Growth

The latest German IFO survey suggests growth should be at 6% right now, according to Societe Generale.

6%! That makes Germany sound more like China or India than a member of a currency union mired in chaos.

Take a look at where the IFO index normally lines up with GDP growth:


Photo: Societe Generale

Societe Generale’s Klaus Baader doesn’t believe the hype, however.

That said, the 6%+ GDP growth rate that the current level of the index would suggest based on the historical relationship, is highly unlikely to be reached. It is more likely that the growth rates of the second half of 2010 of around 2.8% annualized will be maintained into 2011.

The reality is, that 6% rate just isn’t realistic, but it could beat out that lower 2.8% bound.

Nomura’s Jens Sondergaard says growth is more likely to be 3.1%, which would make sense, considering how strong things look right now.

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