Economists warn of German economic 'nosedive'
(JG, Thanks. A most thought provoking analysis, It's going to take a while for me to see if I understand and agree with it :-)
news.ft.com
By Bettina Wassener in Frankfurt
Published: November 12 2002 15:15 | Last Updated: November 12 2002 15:15
Concerns about the seriousness of Germany's economic fragility were stirred again on Tuesday by a dramatic drop in an indicator produced by the Mannheim-based ZEW economic think-tank.
The ZEW's monthly index, based on a survey of some 300 analysts and institutional investors, fell much more sharply than expected to 4.2 points in November, from 23.4 the previous month. This takes it to below the level seen in October 2001 in the wake of the September 11 attacks.
"The expectations indicate the economy will nosedive in the first half of 2003," ZEW president Wolfgang Franz said, adding that the risk of recession had now increased.
Global political uncertainty, worries about the newly re-elected German government's economic policy and the European Central Bank's interest rate stance have contributed to the recent slide in sentiment in Germany.
Expectations for the eurozone declined less markedly, to 24.2, from 34.3 in October, ZEW said.
"There is no other word but horrific for a number like that," said Kamal Sharma, strategist at Commerzbank in London. "Firstly, it raises expectations the ECB will cut by at least 25 basis points if not 50 at its December meeting, and secondly, a recession in Germany in the first half of next year cannot totally be ruled out."
The ZEW index is seen as |
