German Business Confidence Soars Again

In June, business confidence in Germany surged to a level last seen just after reunification in 1991, a survey showed on June 27, confirming that Europe's biggest economy remains on the road to recovery. The widely watched Ifo business climate index rose to 106.8 in June from an upwardly revised 105.7 in May.

The part of the index measuring current conditions climbed to 109.4 from 107.3 in May, exceeding the expectations of economists who had forecast a level of 107.5.

"The overall reading is at its highest since February 1991," said Stephane Deo, an economist at UBS Investment Research who attributed the swell of confidence to the weaker dollar and sanguine industrial indicators.

The Ifo index is generally taken in Germany to be a reliable measure of how the economy will fare in the near future. Gebhard Flaig, the director of the institute, said there was no doubt that the June rating proved that "the economic recovery remains robust."

Germany's gross domestic product (GDP) grew by only 0.9% in 2005. The government is predicting an increase of 1.6 % for this year and some economists say it could be as high as 2%.

Copyright Agence France-Presse, 2006

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