Germany ... where art thou?
A quick round-up of the German economy ... or at least a try and a main point.
This was the FT yesterday ... (as always, bold frames signify important points according to ... well me :))
'Germany’s economic revival picked up markedly in the second quarter of this year, an unusually upbeat Bundesbank reported on Monday, pointing to an improvement across the 12-country eurozone.
A recovery in the construction sector after a severe winter, as well as foreign trade, probably resulted in a marked acceleration in German gross domestic product growth compared with the 0.4 per cent seen in the first quarter, the Bundesbank said in its latest monthly bulletin.'
And yet still, the private consumption is the achilles heal ... when will it ever pick up I wonder?
“There could also have been a temporary stimulation effect from spending by foreigners in connection with the football World Cup,” the central bank added. It also saw the recovery becoming more broad-based with a further gradual improvement in private consumption – long the German economy’s Achilles heel.'
Pay special attention to this ...
'So far the strongest evidence of brightening economic prospects in continental Europe has come from confidence surveys, such as Germany’s Ifo index, although eurozone industrial output figures for May on Monday showed an unexpectedly sharp 1.6 per cent rise.'
Ahh yes ... all is good then; or is it? Speaking of volatile confidence surveys :).
'German investor confidence has dropped unexpectedly for the sixth month running, highlighting fears that the country’s economic upswing may soon fade and signalling disappointment with Berlin’s reform agenda.
The economic sentiment indicator compiled by the Mannheim-based ZEW institute dropped further than expected by 22.7 points in July to 15.1 points – the lowest since May 2005 and well below the index’s historical average of 35.2 points.
The fall came just a day after Germany’s Bundesbank said economic growth had accelerated markedly in the second quarter of this year, compared with the 0.4 per cent growth seen in the first quarter. The weak ZEW result suggested that the pace of growth might start to slow in the second half of this year.'
'Ralph Solveen, economist at Commerzbank, said that the ZEW indicator “does not provide any new information on the state of the economy but generally reflects how the latest economic data have been interpreted.” The survey was now looking ahead to when the VAT rise would take effect and “virtually all analysts are expecting the economy to slow down in 2007”.'
Hmm ok, this was my try then to round-up the state of the German economy and its immediate future - not very succesful I know. My main point then is that we would be wise to show caution and balance in our analyses of all this ... and this goes for Japan as well for that matter.