The German economy is recovering faster than expected from its biggest economic downturn in more than 60 years, the nation’s Chamber of Industry and Trade (DIHK) said Wednesday amid signs of growing optimism among its members.
With Germany having emerged from recession during the second quarter, the DIHK predicted that the Europe’s biggest economy will grow by a solid 2 per cent in 2010 -- after shrinking by 4.8 per cent this year -- as a pickup in exports powers the nation’s economic expansion rate.
“As a result, Germany is on the way out of the (economic) crisis,” said DIHK chief Martin Wansleben releasing the chamber’s latest survey of its 25,000 members, which was mounted in September and October.
The release of the DHIK survey came ahead of both Germany’s leading economic institutes and the German Government revising up their growth forecasts for nation’s economy.
The DIHK survey showed that 24 per cent of the DIHK’s members expect business to improve compared with just 14 per cent in June.
In the meantime, cautious optimism about the outlook for the German economy as well as for Europe’s third-quarter corporate reporting season helped both to drive the euro higher and push the Frankfurt stock market to a new record high.
By early afternoon trading, Frankfurt key DAX index had gained more than 2 per cent to stand at 5842 points after the world’s biggest chemical group German-based BASF AG released better-than-forecast third-quarter profit and a strong set of earnings’ figures from US banking giant JP Morgan.
At the same time, the euro edged up to trade just short of the critical 1.50-dollars mark.
Many economists have been revising upwards their German economic projections as a steady flow of key indicators have pointed to growth taking hold in the country in the run-up to the end of the year.
German exports will grow by 5.5 per cent in 2010 after they tumbled by 14.5 per cent this year, the DIHK forecast.
The latest round of German economic forecasts also represent a significant improvement on the projections laid out at the start of the year when economists were talking about the prospects of the nation’s economy contracting by 6 per cent plus.
But underscoring the fragile state of Germany’s recovery, the DIHK survey showed that about 24 per cent of its members still believe business conditions will worsen. However, this was down from 41 per cent in the DIHK’s last survey.
Releasing the survey, the DIHK also joined other economic forecasters in predicting a rise in German unemployment in the coming months as the recession slowly catches up with the country’s labour market.
The DIHK also warned that companies faced tough financing conditions.
“Financing problems are deteriorating step by step, even for companies with improved expectations,” the DIHK said.
The chamber expects the country’s unemployment queues to swell to 3.9 million next year from 3.45 million in 2009. This will push the jobless rate up to 9.3 per cent.
However, official sources point to Germany’s leading economic institutes releasing Thursday growth figures which are not quite as bullish as the DIHK.
Germany’s leading economic institutes are expected to say Thursday they expect the Germany economy to contract by 5 per cent this year before expanding by 1.2 per cent in 2010.
Either way, the release of the institutes’ figures is likely to result in the German Government revising up its growth projections on Friday from their current forecasts of a 6-per cent contraction this year and a 0.5 per cent expansion rate in 2010.