German business confidence edges up on economic hopes

Business Materials 24 April 2009 09:15 (UTC +04:00)

German business confidence edged up in April, a key survey to be released Friday is predicted to show, adding to hopes of a turnaround in Europe's biggest economy.

In a major test of the economic mood in Europe, analysts expect the Munich-based Ifo economic research institute to say its forward looking business confidence index rose to 82.4 points this month from 82.1 in March.

Based on a survey of 7,000 German executives, publication of the closely watched Ifo index will come in the wake of signs that the downturn gripping the world economy might have began to bottom out.

Another key German economic sentiment survey released earlier this week showed investor confidence surged in April to near a two-year high, amid cautious optimism about the economic outlook for Germany and more positive news out of the crisis-hit world financial sector.

While again slashing its global economic forecasts this week, the International Monetary Fund (IMF) said amid the gloom it had also detected "tentative indications" of optimism from around the world.

In particular, the slew of stimulus fiscal packages unveiled by governments combined with hefty interest rate cuts by leading central banks have helped to raise expectations that an economic pickup could begin to take shape by the end of the year.

Either way, the steady stream of often horrendous economic data is likely to keep up the pressure on the European Central Bank to press on with its rate-cutting cycle and to trim borrowings costs again when it meets next month.

Also this week, leading economic forecasters predicted Germany faced a dramatic 6-per-cent contraction in its economy this year with the steep economic slide rolling through into 2010 and triggering a surge in the nation's unemployment, reported dpa.