Growing optimism thanks to economic upswing

According to the Centre for European Economic Research (ZEW) the belief in a growing German economy is becoming stronger in February 2007. After –3.6 point in January the corresponding economic indicator rose by 6.5 points to currently +2.9 points which signals that the German economy will continue recovering in the second half of this year. Analysts think that domestic demand for investment as well as consumption are going to rise or at least to remain stable.

»Fortunately the indicator´s development signals that the curbing effects of the VAT increase will mainly be temporarily in the opinion of financial market experts. What is important now is that the Federal government take advantage of this optimism by carrying out specific reforms in the fields of company taxation and low-wage sector», says Prof. Wolfgang Franz who is ZEW chairman.

However, the momentum of the economic upswing has decreased with the corresponding indicator only slightly increasing by 0.3 to 70.9 points. Economic forecasts for the Eurozone have markedly improved in February with the Euro-indicator rising to 6.8 points which is an increase by 8.6 points as compared to the previous month. The economic indicator for those regions in Europe using the Euro rose slightly by 0.6 points this month and currently stands at 66.7 points.

309 analysts and institutional investors took part in the ZEW survey in February 2007. A table containing detailed findings of the survey is available online. GERMAN