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The ZEW Indicator of Economic Sentiment for Germany improved a bit, which must be a relief for those who believe that Europe’s largest economy by gross domestic product continues to move rapidly into recession. The measure increased by 22.6 points in December 2012. It now stands at a level of 6.9 points. Thus, the indicator is in positive territory for the first time since May 2012. In the report ZEW analysts wrote:

The indicator’s rise shows that the financial market experts expect the economic activity to stabilize until early summer 2013. Positive U.S. economic data may have contributed to this assessment. They may have spurred the hope that the global economy will gain momentum. Nevertheless, keeping in mind that the Indicator of Economic Sentiment currently hovers only marginally above the zero points-line, the German economy is rather likely to bottom out instead of already experiencing an upswing within the next six months.

And ZEW President Wolfgang Franz said:

The financial market experts forecast the development of the economic activity in 2013 with pre-Christmas optimism. Although the cooling down of the economic activity will last until the beginning of 2013, Germany will not have to face a recession. However, this only applies if the crises in the eurozone do not deepen once again.

Douglas A. McIntyre