Germany's Economy Brightens as Investor Confidence Rallies
Sep 18, 2003
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Investor confidence is continuing to rally strongly in Germany, new data showed, amid increasing signs that the euro zone's biggest but worst-performing economy is set to stage a recovery at the beginning of next year.

A leading confidence index calculated by the Mannheim-based economic research institute ZEW rose by 8.4 points to plus 60.9 points, its highest level since July 2002.

The increase outpaced expectations -- analysts had been pencilling in a gain to around 58 or 59 points.

ZEW's index is based on a poll of around 300 analysts and institutional investors and is the second most important confidence barometer in Germany after the so-called business climate index compiled each month by fellow think-tank Ifo.

ZEW gauges financial analysts' expectations for the economy over the next 6 months: if the majority of analysts and institutional investors polled believe the economy will improve, the index shows a plus. If most are expecting a deterioriation, the index shows a minus.

The ZEW barometer has now risen for 9 straight months, "confirming the anticipated economic recovery at the beginning of next year", the institute said.

"We really are already seeing the first signs of a possible recovery in Germany," ZEW diagnosed.

"Industrial output and manufacturing orders both rose in July and exports also rose strongly in the same month. A month ago, it was only the stock markets that were signalling an imminent economic recovery, now it's the first fundemental data as well."

The Ifo survey, too, which economists regard a more accurate of sentiment in the real economy because it polls business leaders, rose for the fourth month in a row in August and is expected to rise again in September, reinforcing the recovery scenario. (AP)

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