Reports Suggest German Economy Turning Corner

12 December 2001

Two new reports suggest the ailing German economy has hit bottom, with the pace of growth set to quicken in the coming year. Such optimism, however, is not universal.

Mannheim-headquartered research body ZEW’s Economic Expectations Index – a monthly survey of the forecasts of three hundred financial analysts for the next six months – jumped from 12.7 last month to 25.8, its highest level since September 2000. Said ZEW economist Felix Hüfner: “Clearly the view is taking hold among analysts that the economic low is about to be passed.”

Adding to the upbeat news, Kiel’s IW Institute announced a projection for 2002 GDP growth of 1.2%, up from the 0.5% predicted for this year. Such acceleration, said IWI, will be fuelled by an improving international situation, with a concomitant rise in economic activity, investment and US demand in the second quarter especially.

However, other forecasters are not so positive. Commerzbank thinks current economic indicators are not strong enough to suggest a Q1 upturn, while Handelsblatt’s Euroland Barometer, based on European Commission statistics, predicts first-quarter growth of 0.9%, the first time the forecast has dipped below 1% in five years.

News source: Handelsblatt (Germany)