Finally German business confidence seems to be tapping into a more positive vein. It seems to be homing in on the brighter recovery signals in the economy and putting the bad news of the Eurozone debt crisis behind it. Business sentiment is recovering, consumer sentiment is picking up and Germany has been spared a double dip recession by the skin of its teeth. German exports are doing better, consumer confidence has more spring and the stronger tone in the German stock markets will have boosted optimism. Business sentiment should also have been encouraged by the ECB’s on-going commitment to keep monetary policy at a very accommodative setting. The German economy may be coming out of casualty and faring a little better in recovery, but a return to fuller health still needs a lot more care and attention.
Germany is in no isolation ward. It’s recovery is critically dependent on the health of its partners in the Eurozone, who are faring a lot worse. For its own on-going recovery, Germany needs to ensure that the grounds for growth are set in motion elsewhere in the Eurozone. It needs to give its full blessing to the ECB’s monetary stimulus and it also needs to give much better consent to other Eurozone governments ditching tougher fiscal austerity in favour of more growth oriented budget policies. The IMF has already identified the need for Keynesian counter-cyclical stimulus in the Eurozone. Hard as it may seem for Germany, it must adopt a similar position or else any hopes for Eurozone recovery and fuller growth in Germany will wither on the vine.
GERMANY MAY 2013 APRIL 2013 MAY 2012
BUSINESS CLIMATE 105.7 104.4 106.6
BUSINESS CLIMATE 105.7 104.4 106.6
CURRENT CONDITIONS 110.0 107.3 113.0
FUTURE EXPECTATIONS 101.6 101.6 100.6
FUTURE EXPECTATIONS 101.6 101.6 100.6
The headline business climate index compared with the Reuters consensus forecast for a reading of 104.5
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