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Benjamin · 14-11-2006, 13:12

German economic growth slows in 3rd quarter, ZEW index falls
The Associated Press, November 14, 2006

Germany's economy grew more slowly in the third-quarter, the government reported Tuesday, while the closely watched ZEW index of economic sentiment fell again in November for its 10th consecutive monthly decline .

Gross domestic product in Europe's largest economy was up just 0.6 percent in the July-September period, according to the Federal Statistics Office. That was lower than 1.1 percent growth in the second quarter and below the 0.6 percent predicted by analysts polled by Dow Jones Newswires.

In the third quarter of 2005, GDP was up 2.3 percent.

UniCredit economist Andreas Rees said that even though economic activity lost ground, "the upswing remains intact."

He said fourth-quarter GDP was expected to rise 1 percent on the perception that consumers will spend more ahead of the Jan. 1 increase in value-added tax from 16 percent to 19 percent.

Meanwhile, the ZEW index dropped as fears of a global economic slowdown and more interest rate increases by the European Central Bank loomed large.

The index, conducted by the ZEW, or Center for European Economic Research, fell to minus 28.5 from minus 27.4 the month before, its lowest level since March 1993. Analysts surveyed by Dow Jones Newswires had expected the survey index to rise to minus 25.

Any reading below zero shows pessimism about the economic outlook.

UniCredit's Markets & Investment Banking economist Alexander Koch said the decline was "no reason to panic."

"In our view, the extremely low reading of ZEW growth expectations, which is the lowest for more than a decade , paints an overly pessimistic picture," he said in a research note. "Although we don't challenge the clear signs of a forthcoming moderation in growth ... in 2007, the magnitude of the slowdown should remain limited. The momentum of the economic recovery has proved to be more robust than initially thought."

Sentiment was supported by lower oil prices — but not enough to overcome fears about the impact of a slowing world economy and expected interest rate increases by the ECB, ZEW president Wolfgang Franz said in a statement.

He reiterated that Germany's planned VAT increase will dampen a recovery in the economy in the first part of next year.

But he added that German consumers would start spending more toward the middle of next year and that recent corporate tax reform by the government would help lure new investment to Germany.

"The downward trend of expectations seems to have come to a halt. This indicates that consumer demand will stabilize in the second half of next year. Furthermore, the decisions on the corporate tax reform, which will improve the German economy's attractiveness, are sending out a positive signal," Franz said.

The ECB meets Dec. 7 and is expected to increase its key interest rate from 3.25 percent to 3.5 percent.

Meanwhile, the federal statistics office Destatis reported that German consumer prices rose more slowly than expected in October.

Consumer prices rose 0.1 percent in October compared to a drop of 0.7 percent in September. In October 2005, prices rose 1.1 percent. The decline was led, in part by heating oil prices, which fell 7.3 percent from October 2005 to October 2006, and a drop in seasonal food prices after rising during the summer because of drought-like conditions.

The ZEW index is based on a survey of economic expectations among investment professionals and is considered a guide to where Europe's largest economy may be going.

It remains well below its historical average of 34.3. The last time it was lower was in March 1993, when it fell to minus 29.4.

The Mannheim-based ZEW surveyed 298 investment analysts and institutional investors between Oct. 2 and Oct. 16.

___

On the Net:
http://www.zew.de/en/
http://www.destatis.de

14-11-2006, 13:12	#5
Benjamin TBB Family Registriert seit: Mar 2004 Beiträge: 10.374	German economic growth slows in 3rd quarter, ZEW index falls The Associated Press, November 14, 2006 Germany's economy grew more slowly in the third-quarter, the government reported Tuesday, while the closely watched ZEW index of economic sentiment fell again in November for its 10th consecutive monthly decline . Gross domestic product in Europe's largest economy was up just 0.6 percent in the July-September period, according to the Federal Statistics Office. That was lower than 1.1 percent growth in the second quarter and below the 0.6 percent predicted by analysts polled by Dow Jones Newswires. In the third quarter of 2005, GDP was up 2.3 percent. UniCredit economist Andreas Rees said that even though economic activity lost ground, "the upswing remains intact." He said fourth-quarter GDP was expected to rise 1 percent on the perception that consumers will spend more ahead of the Jan. 1 increase in value-added tax from 16 percent to 19 percent. Meanwhile, the ZEW index dropped as fears of a global economic slowdown and more interest rate increases by the European Central Bank loomed large. The index, conducted by the ZEW, or Center for European Economic Research, fell to minus 28.5 from minus 27.4 the month before, its lowest level since March 1993. Analysts surveyed by Dow Jones Newswires had expected the survey index to rise to minus 25. Any reading below zero shows pessimism about the economic outlook. UniCredit's Markets & Investment Banking economist Alexander Koch said the decline was "no reason to panic." "In our view, the extremely low reading of ZEW growth expectations, which is the lowest for more than a decade , paints an overly pessimistic picture," he said in a research note. "Although we don't challenge the clear signs of a forthcoming moderation in growth ... in 2007, the magnitude of the slowdown should remain limited. The momentum of the economic recovery has proved to be more robust than initially thought." Sentiment was supported by lower oil prices — but not enough to overcome fears about the impact of a slowing world economy and expected interest rate increases by the ECB, ZEW president Wolfgang Franz said in a statement. He reiterated that Germany's planned VAT increase will dampen a recovery in the economy in the first part of next year. But he added that German consumers would start spending more toward the middle of next year and that recent corporate tax reform by the government would help lure new investment to Germany. "The downward trend of expectations seems to have come to a halt. This indicates that consumer demand will stabilize in the second half of next year. Furthermore, the decisions on the corporate tax reform, which will improve the German economy's attractiveness, are sending out a positive signal," Franz said. The ECB meets Dec. 7 and is expected to increase its key interest rate from 3.25 percent to 3.5 percent. Meanwhile, the federal statistics office Destatis reported that German consumer prices rose more slowly than expected in October. Consumer prices rose 0.1 percent in October compared to a drop of 0.7 percent in September. In October 2005, prices rose 1.1 percent. The decline was led, in part by heating oil prices, which fell 7.3 percent from October 2005 to October 2006, and a drop in seasonal food prices after rising during the summer because of drought-like conditions. The ZEW index is based on a survey of economic expectations among investment professionals and is considered a guide to where Europe's largest economy may be going. It remains well below its historical average of 34.3. The last time it was lower was in March 1993, when it fell to minus 29.4. The Mannheim-based ZEW surveyed 298 investment analysts and institutional investors between Oct. 2 and Oct. 16. ___ On the Net: http://www.zew.de/en/ http://www.destatis.de Geändert von Benjamin (14-11-2006 um 13:30 Uhr)