Germany eyes economic upturn

BBC News Online ^ | May 25 2003

[knighthawk]

Business confidence in Germany rose unexpectedly in May, raising hopes of a better second half of the year for the economy. The industrial confidence index by the economics research institute Ifo rose to 87.6 from 86.6 in April.

"Based on the new Ifo figures, the chances of an upturn in the second half of the year have improved," Ifo President Hans-Werner Sinn said in a statement.

The index is now at its highest level since October 2002, after falling unexpectedly in April.

Three months of the Ifo index either growing or contracting is the standard for indicating a trend, leaving another two months before claims of a recovery can be supported.

'Positive surprise'

The rise comes despite poor recent economic figures and as the euro strengthens, making exports less competitive.

"This was a positive surprise," Ifo head of business surveys Gernot Nerb told BBC Radio's World Business Report.

The size of the jump was unexpected by analysts who had forecast the index to be flat or at best only slightly higher in May.

Mr Nerb said that Ifo's latest information suggested that the stronger euro has helped the retail sector by cheapening imports and boosting consumer spending.

Falling petrol prices since the end of the Iraq war have also put spare change in consumers pockets, he said.

Despite the strong euro, firms in Germany's key export manufacturing sector are becoming more optimistic because prospects for the global economy appear to be improving, he said.

"Here they expect there might be some pick up, which of course would benefit German exports," said Mr Nerb.

Weak year

Germany's economy shrank by 0.2% in the first quarter of this year, marking the third year of near zero growth.

Some economists have warned that Germany is already in recession again.

But under the commonly accepted definition of recession - two consecutive quarters of negative growth - Germany is on the brink of, but not yet back in, recession.

The Ifo index is based on a survey of 7,000 west German business leaders in the manufacturing and construction industry and wholesale and retail traders.

[knighthawk]

Europe-list

If people want on or off this list, please let me know.

[hgro]

The Germans are being sucked into a black hole of socialist greed that is stripping them of all of the progress they were able to make under the previous capitalist system in which they operated.

[telebob]

"Based on the new Ifo figures, the chances of an upturn in the second half of the year have improved," Ifo President Hans-Werner Sinn said in a statement.

I guess this passes for enthusiasm in the German economy. The chances for an upturn have improved. Probably not the best time to bet the farm...

[facedown]

I'd be a bit cautious about this. Other indicators, such as unemployment, don't seem to be improving.

[Michael81Dus]

Right, we´re far away from recovering!! We need reforms (REAL ONES, giving people more self-responsibility), then count 2 years from that date and one can say that the worst is over. Again, we´re far from that now!

[facedown]

We need reforms...

Taxes and hiring/firing regulations should be the top priorities.

[Michael81Dus]

Not to forget the health care and pension systems!

As for the hiring/firing regulations, I call for an easier way to fire people, but still with a 4-week notice.

[facedown]

Not to forget the health care and pension systems!

Absolutely.

[Lessismore]

Energy costs in Euroland are way down. When the Euro was $.85, a $30 barrel of oil was about 35 Euros. At $1.15, the same barrel of oil is about 26 Euros. So crude oil prices are down over 25% on exchange ratios alone.

[Schweinhund]

hmmm...no?

if you say SOCIALIST GREED, why has the general direction been free market for years? FINLAND or SWEDEN have an even stronger SOCIAL DEMOCRAT constitution than germany and they live quite good with it...better than germany, at least. they don't have business taxation as high as germany, that might be the point.

the real problem is, direction is not enough when there's no movement. the actual problem in germany is a lack of readiness to give up privilege. as the political power of employed and employees is more balanced than in america, this totally suffices to block any movement whatsoever.

a weak politic program by SPD/GREENS does the rest...even IF these reforms (agenda 2010 etc.) pass, they'll have to be redone in 5 years or so.

[Michael81Dus]

New polls:

17% believe, Schröder can lead Germany out of the misery - 77% do NOT!

His SPD party reaches a record low in polls: only 25% would vote for them, they never in history had such a low poll result.

The CDU/CSU on the other hand would gain 49% of the votes today. (The other parties: Greens 12%, FDP 7%, others 7%)

[Michael81Dus]

I forgot the source: Forsa institute for RTL Television (http://www.rtl.de)

[Schweinhund]

but then i don't see any potential in the CDU/CSU alone. a big coalition would be a step to probably get something done, a good sign that it's time to get things done.

and bremen speaks for itself, too. polls change daily.

[lavaroise]

If it was not for the amounts of guest workers and tax free Easterners pumping the German economy... meanwhile Germans pay all of the taxes....

[Michael81Dus]

No, polls do not change daily. Schröder is down since months. Bremen speaks for itself, ONLY FOR ITSELF! Bremen is a special case, and can not be appliable for the federation.

The CDU/CSU alone or in coalition with the FDP would be the best for this country, the SPD has proven that they can´t and won´t change anything! They have no will to make the necessary reforms.

A big coalition would be the worst for us!

[bruinbirdman]

"I'd be a bit cautious about this."

Germany 'fixed' economic report.

yitbos