At A 10-Month High, German Confidence Beats Expectations
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German investor confidence has leaped to a 10 month high, raising expectations and new hope for eurozone’s single largest economy. But most recent data shows that the German economy contracted slightly in the last quarter of 2011, while the euro area as a whole contacted during the same quarter, the first contraction since 2009.
The Mannheim-based ZEW economic think-tank’s monthly sentiment survey showed that business confidence rose to its highest level since April 2011, beating analysts’ expectations.
ZEW economist Marcus Kappler said:
German investor confidence has leaped to a 10 month high, raising expectations and new hope for eurozone’s single largest economy. But most recent data shows that the German economy contracted slightly in the last quarter of 2011, while the euro area as a whole contacted during the same quarter, the first contraction since 2009.
The Mannheim-based ZEW economic think-tank’s monthly sentiment survey showed that business confidence rose to its highest level since April 2011, beating analysts’ expectations.
ZEW economist Marcus Kappler said:
[quote] We are quite confident that the economy is picking up again after the first half of this year. The recession probability is very low. We got some very positive news from the United States, that’s stimulating of course. On the political side, I think the overall picture is that the crisis in the euro zone now looks less scary than three months ago. [/quote]Related: Economy Watch global real-time consumer confidence index
Germany’s export-driven economy was one of the most resilient of all euro zone economies during the onslaught of the 2008/09 financial crisis. However, official data showed that the euro-zone’s largest economy crawled to a standstill in the last quarter of 2011, contracting 0.2 percent.
The country’s national statistic office, Destatis, said that fall in foreign trade and consumer spending were the most likely reasons for the results.
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The dip in GDP was “not as deep as expected, confirming that the German economy only took a growth pause and is not approaching a new recession,” said Carsten Brzeski, economist at ING Belgium, as reported by the AFP.
Brzeski added:
[quote] Of course, a quick rebound is not (automatic) and the big unknown for the German economy remains the sovereign debt crisis. One thing, however, is obvious – today’s numbers are no reason at all to start singing swan songs on the German economy. [/quote]The German numbers, combined with Italy’s falling bond yields and a short term Greek resolution, saw the euro gain strength, despite a massive downgrade of 6 European nations by Moody’s.
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However, Businessweek reports that the overall eurozone economy is likely to have contracted for the first time since 2009, as the “region’s debt crisis undermined confidence and prompted governments to toughen austerity measures”.
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