Survey: German Business Confidence At 10-Year Low

By Agence France-Presse While investor confidence in Germany appears to be on the rise again, company bosses are not so sure and business confidence in the euro zone's biggest economy is at a 10-year low point, the DIHK Federation of German Chambers of Commerce said on June 17. On the same day that a key investor confidence barometer calculated by the ZEW economics research institute showed growing optimism among financial analysts and institutional investors, DIHK published the results of its latest survey which showed that companies' business expectations were at their lowest levels since the 1993 recession. "With a minus of 25 percentage points, companies' business expectations are currently worse than they have been in 10 years," DIHK wrote. Only 17% of companies polled expected business to improve this year, the lowest proportion seen since the start of the 1993 recession. By contrast 42% of companies were predicting a deterioration in business, the highest proportion since 1993. "The German economy is stuck in a stubborn economic lull," DIHK said. Exports were being hit by the rising euro, investment demand remained weak and while domestic demand appeared to have stabilized, the high rate of unemployment was putting the brakes on overall demand. "The economy cannot get out of its sideways movement. Indeed, companies are increasingly worried about exports, hitherto the last remaining pillar of economic activity," DIHK said. "In the immediate term, light recessionary tendencies are to be expected in Germany in the coming months." The gloomy survey contrasted sharply with the findings of the ZEW, whose closely watched economic expectations index rose by an unexpectedly sharp 2.6 points to plus 21.3 points in June as analysts and institutional investors hoped the recent cut in interest rates by the European Central Bank could help the ailing German economy back on its feet. Copyright Agence France-Presse, 2003

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