German businessconfidence rises
27 July 2004, MUNICH - German business confidence rose significantly in July for the first time in three months, a leading economic research institute said Tuesday, mirroring a trend across the 12-nation European single currency zone.
27 July 2004
MUNICH - German business confidence rose significantly in July for the first time in three months, a leading economic research institute said Tuesday, mirroring a trend across the 12-nation European single currency zone.
The Munich-based Ifo institute said its confidence index, based on a survey of 7,000 executives, rose to 95.6 from 94.6 in June as exports drove growth in Europe's largest economy and helped compensate for stagnating consumer spending.
The rise surpassed the expectations of most analysts. The survey, based on interviews with economists and business leaders, showed that both their assessment of the current climate and their expectations for the months to come had improved.
Demand for German exports is booming and may help the economy post its best performance since 2000, the Ifo Institute report said.
The Ifo figures were issued after Bundesbank President Axel Weber said that the government's forecast that the economy would grow by 1.8 percent this year was "realistic" because growth in the first half had been stronger than expected.
He said that the central bank put growth in Germany in the second quarter at 0.5 percent. Until now the bank had expected this figure to be slightly higher than growth in the first quarter of 0.4 percent.
Amid signs of economic optimism, the German government at one point earlier this year pegged growth this year at about 1.5 percent.
Weber said that growth was being driven by "very strong exports" but that domestic demand was slack.
He warned that Germany households were saving too much rather than spurring the economy through spending. He also cited the current high price of crude oil as a brake on consumer spending.
He also said that the German public deficit in 2004 could well exceed last year's figure of 3.9 percent of gross domestic product.
Eurozone rules limit public deficits to 3.0 percent of output and Germany is under strong pressure from the European Commission to put its public finances in order.
Subject: German news