|
German economy recovering
|
 |
February 26, 2002: 6:00 a.m. ET
Ifo business survey shows confidence growing in February for 4th straight month
|
LONDON (CNN) - German business confidence rose for the fourth consecutive month in February, indicating Europe's largest economy is close to recovering.
The country's key economic barometer, the Ifo monthly survey of 7,000 west
German companies, rose to 88.7 from 86.3 points in January. The February increase was larger than the analysts' consensus of 87.2.
Ifo said the jump in business confidence shows Germany's battered economy, which slipped into recession last year along with the U.S. and Japan, has bottomed out.
"In our opinion, we're close to the turning point," Gernot Nerb, Ifo's senior economics, told Reuters. "We can say that the economy is firming, and we can talk of the start of a recovery."
Most analysts agreed with Ifo's upbeat interpretation of the February survey.
"The numbers are very positive, as they are much stronger than expected," Stefan Bielmeier, an economist at Deutsche Bank, told Reuters. "It signals an economic upturn in the coming quarters."
Ifo also said the survey puts pressure on the European Central Bank to cut interest rates by a quarter of a percent when it meets next week. ECB's key rate has remained at 3.25 percent since November.
"In terms of current interest rate levels and inflation, the ECB has room to cut rates and help the upturn," Nerb said. "I would say that a cut would fit into the environment now."
ECB President Wim Duisenberg said on Monday he expects the global economy to post a "mild" recovery this year led by the United States.
Last week, the National Association for Business Economics said economists it polled in February think the first U.S. recession in a decade is already over.
On Monday, the German Finance Ministry said it expected the country's economy to grow by 3 percent next year for the first time since 2000. Growth this year is likely to be around 0.75 percent this year, compared with 0.6 percent in 2001.
Inflation has also been easing after reaching 2.4 percent in 2001, up from 2.1 percent the previous year and 0.6 percent in 1999.
The preliminary national figure for February is expected to show a fall in the year-on-year rate to around 1.8 percent from 2.1 percent in January, when prices jumped due mainly to higher taxes and increased costs for fresh food.
That would put Germany's inflation rates below the ECB's target ceiling of 2 percent for the euro zone. 
|
|
|
|
|
|
|
