Germany facing bumpy economic recovery

Germany facing bumpy economic recovery
Photo: DPA
Germany's economic recovery following the worst recession in 60 years looks to be gradual and bumpy, a closely-watched confidence survey suggested on Tuesday.

The ZEW index, which measures the confidence of financial market players in the future health of the German economy, was broadly stable in October, dipping to 56.0 from 57.7 in September.

This was well above the long-term average of 26.7 for the series but slightly worse than analysts surveyed by Dow Jones Newswires had forecast.

“The assessment of the financial market experts reflects the prevalent opinion. The economy will improve only gradually,” said the ZEW institute’s president Wolfgang Franz.

“The assessment of the current economic situation in Germany is still very poor and is only slowly improving,” the institute added.

A sub-index measuring the current state of the economy nosed higher but by only 1.8 points.

Despite the slight drop, the first since July, analysts were broadly upbeat.

Commerzbank economist Simon Junker said: “The trend is still upwards, though, and the positive news to be expected on the economy is likely to push up the ZEW index in the coming months.”

Indications have been growing recently that the German economy is over the worst of the economic crisis.

Business confidence surveys have been better than expected and so-called “hard” data, showing the current state of the economy, have also improved in recent months.

That has prompted Chancellor Angela Merkel to upgrade her view of likely output this year, forecasting a slump of four to five percent this year, rather than the six percent officially projected by the government.

The government will give new official forecasts for growth on Friday, an Economy Ministry spokeswoman told AFP. According to the Bild daily, Berlin will hike its forecast to minus 4.5 percent.

Carsten Brzeski, from ING, said: “The German economy is about to enter calmer waters. Still, it could still outperform most if not all of its fellow eurozone countries next year.”

“In a way, following the German economy in the period ahead could be like watching a match of the German national football team. Very often it does not look good. There is a lot to complain about but in the end the team scores,” he added.

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