Growing investor confidence
June 16, 2009
Despite the global recession, financial experts in Germany are optimistic about the prospects for an economic recovery. The monthly expectations indicator released by the Mannheim-based research institute jumped by nearly 14 points to almost 45 points, suggesting that the mood among analysts and institutional investors is improving.
In addition to the jump in the expectations indicator, current conditions were assessed as being better for the first time since September 2008. A recovery from the recession is expected to come around the end of the year.
"The assessment of the experts indicates that the economic downturn dynamics are currently coming to rest," says Wolfgang Franz, director of the institute.
"They further see tendencies for a recovery at the end of this year. This cautious optimism should not be destroyed by overly-pessimistic projections," Franz said.
Franz also stressed that research suggests there is a growing level of optimism for a recovery in the banking sector.
The latest confidence boost in June comes despite bleak economic data indicating that German exports, industrial production and factory orders are falling sharply in the wake of the global economic downturn.
"The repeated recovery of economic sentiment reveals a consolidating optimism among the financial market experts, even though industrial production and incoming orders do not yet show a clear upward trend," Franz added.
The two main concerns which analysts think could stand in the way of a firm recovery are a sudden rise in oil prices, or accelerating unemployment figures.
The positive figures, however, are being viewed with caution by some analysts. Reiner Sartoris, of HSBC, warns against putting too much stock in the current uptick..
"The survey results seem to suggest that by the end of the year we'll be back to a normal level of economic activity. We, however, do not share this view. The situation is still very difficult, and you should not rely on a recovery as strong as suggested by the survey," he said.
Hans-Juergen Delp of German lender Commerzbank has said that the new figures are good news, but that the upward trend still needs to gather steam.
As he sees it, "The index will support the market. But the tense situation will only relax once there is real economic data to back up the optimism. Until then, the market will remain nervous."
ai/dpa/AFP/AP
Editor: Susan Houlton