Germany: Economy bouncing back
Both the purchasing managers’ index and the Ifo business survey rose again strongly in July. The PMI for Germany reached its highest level for eleven months, business expectations in the Ifo survey the highest level for thirteen months. The evidence for an economic rebound could scarcely be clearer.
It is also encouraging that, according to the Ifo test, the assessment of current business expectations – which in the turnaround traditionally lags business expectations by a few months – rose appreciably for the first time. The improvement in the business climate is particularly pronounced in the manufacturing sector, the sector hardest hit by the economic crisis.
These latest very positive figures further increase the likelihood that the economy will pick up sharply in the third quarter of 2009. This shores up our view that German gross domestic product will increase strongly in Q3 compared with Q2. The drop on a year earlier will narrow to around -4%. The economy is over the worst.
Dr. Rolf Schneider
e-mail: rolf.schneider@allianz.com
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