German Slowdown: Light at the End of the Tunnel?

03 January 2002

The German recession is set to continue into the second quarter of 2002, concludes the nation’s business daily Handelsblatt. But could that be a glimmer of daylight at the end of the Q2 tunnel?

Its prognostication is based on the paper’s reading of the latest set of economic indicators, especially the January Early Indicator for western Germany which languished at 0.4% – two full percentage points below its reading in January 2001. However, the rate of month-to-month decline has progressively eased from October (1.1%), November (0.7%) and December (0.5%).

Another key indicator, Handelsblatt’s Economic Barometer for eastern Germany, suggests that the decline has bottomed-out, holding at 1.6% for the third successive month since November, itself a marginal improvement on October’s 1.7%.

Both sets of data predict economic trends three months ahead, and both are compiled from the latest available economic data in a number of key areas.

The Expectations sub-index, which reflects German companies’ view of prospects for the next six months, rose to 90.9 in January – up from 89.6 in October. Although a reading of less than 100 implies that pessimism still reigns, it now seems to be tinged with a rosier hue.

News source: Handelsblatt (Germany)