Analysts wary about pace of Germany’s recovery - survey

19 January 2010 18:15  [Source: ICIS news]

TORONTO (ICIS news)--Analysts have become more sceptical in their outlook for Germany’s economy, expecting a “burdensome” way out of the recession rather than a quick recovery, according to a survey by the ZEW centre for European economic research on Tuesday.

The centre's key economic sentiment indicator fell to 47.2 points in January, down 3.2 points from December, marking its fourth consecutive decline, it said.

The indicator is based on a survey of 295 analysts between 4 and 18 January who were asked about their expectations for Europe’s largest economy in the coming six months.

The latest data suggested a “burdensome and long” way out of the recession, said ZEW president Wolfgang Franz.

"The assessment of the financial market experts suggests that we will see an economic recovery in 2010 at best, but not a clear economic upswing,” he added.

As for sector outlooks, automobile and consumer consumption were likely to “develop downwards” in the first half of 2010, ZEW said, citing the survey findings.

However, business expectations for the German machinery sector was improving, it said.

ZEW’s findings echoed similar sentiments by the country’s federal finance ministry on Tuesday.

The ministry, in announcing a record €85.8bn ($124.3bn) deficit in its draft fiscal 2010 budget, warned not to expect a “self-sustaining” economic recovery for this year.

Rather, Germany’s overall economic balance would remain severely affected throughout the year. There was no alternative to government growth policies, even at the cost of rising debt, the ministry said.

Meanwhile, Germany’s federal statistics office said in a preliminary assessment last week that the country’s GDP likely stagnated in the fourth quarter in comparison with the third quarter. For the full year of 2009, the economy shrank 5.0% from 2008.

Germany’s chemical industry expects full-year production to have declined 10% in 2009 from 2008.

For 2010, Frankfurt-based chemical industry association VCI is forecasting a 5% increase in production.

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