German firms not worried about China and Greece, survey shows

German companies shrugged off concerns about China's economy and turmoil in Greece, a key survey showed. The result, however, likely did not yet reflect the latest falls in Chinese and global stock markets.

The closely watched Ifo institute index of business sentiment in Europe's largest economy rose unexpectedly to 108.3 points from 108 last month, Ifo said on Tuesday. Analysts had predicted a decrease to 107.6 points.

Companies' outlook for the coming months fell, but only slightly.

The bulk of the responses came in the first two weeks of this month, a period which included China's surprise devaluation of its currency on August 11 - but which preceded the dizzying stock market plunges on Friday and on Monday.

The positive result comes amid uncertainty about slowing economic growth in China. The world's second-largest economy is a major market for German companies, but worries over a slowdown there were not widely felt in the survey, even though exports have already slowed somewhat.

Recent figures show that German's economy is increasingly supported by domestic consumer spending as well as exports.

Analysts cautioned that the Ifo survey might not yet fully reflect all the turmoil.

Still, there are reasons to argue that a China slowdown will not derail Germany's economy.

"German companies remain unimpressed by the current series of uncertainties and turmoil," analyst Carsten Brzeski said.

Brzeski said a slowdown in China's high economic growth rates was not the same as drop in output.

He noted that German exports to China had already slowed in the first half of the year, without derailing the German recovery.

"The geographical diversification of German exporters should cushion any further weakening of Chinese demand," Brzeski said. "As long as other major export markets like the US, the UK, eastern Europe and the euro zone are continuing to grow, or at least avoid a new slowdown, German exports should remain solid."

German companies have also looked past troubles in Greece, which agreed with euro zone creditors last week on a third bailout to rescue the government's finances.

The Ifo index is considered an early indicator for Germany's economy. Each month, about 7,000 companies are asked for their assessment of the economic situation and their outlook for the coming months.

Separately, Germany announced a budget surplus of €21.1 billion in the first half on healthy tax revenue and a windfall from the sale of mobile phone frequencies.