The August ZEW survey shows the German economy still in cautious, gradual recovery mode. The recovery is far from running away with itself, tempered down by worries about global economic slowdown, the risk of the US Fed’s easing cycle coming to an end soon and the continuing shadow cast by Eurozone uncertainties. Economic optimism seems to be in the ascendant again. The pick-up in economic sentiment seems to be well supported by the recovery in German demand across the board. This is mainly being driven by Germany’s burgeoning export sector, spreading into stronger industrial activity and better consumer confidence as employment prospects continue to pick up. The fact that Eurozone uncertainties are stabilising for the time being are being construed as a net positive for the economy. While the economic headwinds seem to be easing, it is still likely to be a long haul back to full health, although Germany seems to be well placed to be a major beneficiary once global economic fortunes are restored.
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