German economy boost
October 23, 2009
The Munich-based Ifo Institute said its business climate index, based on a survey of 7,000 executives, edged up from 91.3 in September to 91.9 points in October in its seventh successive monthly increase.
The index, seen as a major barometer of the economic mood in Europe, is the latest indication that Europe's largest economy is pulling out of its worst recession since World War II.
"The economic recovery continues hesitantly," a statement by Ifo chief Hans-Werner Sinn said.
The euro has appreciated 20 percent against the dollar since mid-February and reached a 14-month high of $1.50 this week, eroding export returns.
But Sinn said the soaring euro would not dampen companies' outlooks. "Despite the appreciation of the euro, companies see improved export opportunities," Sinn said.
Economists say the rise in the Ifo index will boost the recovery in the run up to the end of the year.
"The third quarter was a good quarter for the German economy; probably even an excellent quarter," ING Bank economist Carsten Brzeski told news agency dpa on Friday. "Looking ahead, today's Ifo gives hope that the economy can take some of the current momentum into the next quarter."
Bright outlook
The index's publication coincides with Chancellor Angela Merkel's attempts to forge a new centre-right coalition government following her conservative political bloc's success at last month's national election.
But Merkel's Christian Democrats have so far failed to reach agreement with its nominated coalition partner, the business-friendly Free Democrats on the size of planned corporate and income tax cuts, which are a key policy platform of the new government.
The government last week raised its economic forecasts, predicting growth of 1.2 percent in 2010 after a contraction of 5 percent this year.
A separate report released on Friday by the Markit Economics group showed the country's manufacturing industries expanded in October for the first time in 15 months.
sp/dpa/AFP
Editor: Andreas Illmer