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Germany's Improved Business Confidence Supports Strength Of Economic Resilience

 April 20, 2012 11:05 AM


The better than expected confidence among the German business and investors has not only surprised economists but has also strengthened optimism for better days ahead for economic activities in the region. This news supports the view that the current level of economic recovery strength is stronger than expected.

The level of business confidence clearly suggests that there is no volatility and has continuously exceeded economists' estimates since September. For the sixth straight month, business confidence has witnessed an increase. In April, the business confidence index improved to 109.9 from March's 109.8, data from Ifo Institute indicates.

Economists were expecting the business confidence to contact to 109.5. The index was based on 7,000 executives' opinion. It is very important that the largest economy in the European Union provides solid growth prospects which could instill confidence among the other nations in the region that have been reeling under the debt crisis.

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Some of the positive economic indicators from German include, March jobless claims skid to 6.7 percent, corporate tax revenue recording 22 percent upside in March fueled by export growth and demand from consumers. This apart, unions could bargain for better pay package for its workers that are said to be one of the best in two decades.

A Bloomberg report quoted an economist saying that Germany's economy is on a healthy wicket and that the recovery is broad-based. Yet there are concerns whether the country will be able to maintain its export momentum to keep its business confidence elevated.

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The concern is on the back of a somewhat cooling Chinese economy, a moderate U.S. economic recovery, and the austerity fueled slowdowns among the other Euro Zone nations.

There is also an opinion that suggests that the business confidence is not completely translated into official data. This gains have come while the manufacturing sector witnessed its first fall in three months. These apart, retail sales also recorded downside every month, but this is a domestic one and the nation is depending more on exports for growth.

Interestingly, only yesterday leading economic institutes from Germany have raised their economic growth outlook to 0.9 percent for 2012 from 0.8 percent. This is expected to grow by another two percent next year.

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