Analyst and investor sentiment on the outlook for Germany improved in December aided by falling oil prices and interest rate cuts, raising hopes a recession may come to an end before 2010.
The Mannheim-based ZEW economic think tank's monthly poll of economic sentiment unexpectedly rose for a second straight month to -45.2 from -53.5 in November, the institute said today.
"The slight improvement of the ZEW indicator signals that the worries about a further aggravation of the recession in the middle of 2009 seem to be limited," the think tank said.
ZEW economist Michael Schroeder said the data - still very weak on a historical basis -- had to be kept in perspective.
"We should not over interpret these figures," he said.
The ZEW said interest rate cuts by central banks should help restore confidence in the economy, while analysts pointed to falling oil prices as a further source of relief to Germany.
The consensus forecast in a Reuters poll of analysts last week was for the headline index to fall to -55.0. A separate ZEW index measuring an assessment of current conditions fell to -64.5 from -50.4 in November. The consensus forecast had been for a drop to -60.0.
Gerd Hassel, an economist at BHF Bank said the index suggested contractions in gross domestic product (GDP) should begin to ease from the middle of next year.
"In the fourth quarter, we could see stagnation, from 2010 it will go upwards. This picture fits to the index," he said.
Germany suffered its second consecutive quarter of contraction in the July-September period, and a number of economists believe the performance in the current quarter could be one of the worst since the country reunified in 1990.
Reuters