The German economy has rebounded from a contraction at the end of last year raising hopes that a pick up on the nation's growth rate could help to haul Europe out of recession. This followed the release of a slew of key data during the week showing Europe's biggest economy ending the first quarter of 2013 on a firm footing with factory orders, production and trade all rising in March.
"German companies have turned the corner in the first quarter," said ING Bank economist Andreas Rees. The round of solid economic numbers out of Germany has helped to power the nation's share market to a series of record highs this week and to underpin the euro.
Shares on the nation's main stock market in Frankfurt rocketed up to another all-time high Friday of more than 8,300 points. This came after the statistics office said the country's exports bounced back in March from a fall in February to post a 0.5-per-cent gain as global trade regained momentum. Imports climbed by 0.8 per cent.
"The signs are good for a rise in demand for German products in the second half of the year," said Oliver Wieck, economist with the Federation of German Industry (BDI). Wieck expects German exports to grow by 3.5 per cent this year after monthly foreign orders rose by 2.7 per cent in March. Germany's stout economic performance also stands in marked contrast to the debt-hit eurozone.
The 17-member currency bloc lurched into a recession last year as governments across the region stepped up their efforts to slash high deficit-and-debt levels. Italy's statistics office said Friday that industrial production in the eurozone's biggest economy contracted by a more than forecast 0.8 per cent in March, while figures published Thursday showed another startling spike in the numbers our of work in Greece and Portugal.
The release of the figures came just days after data published in Germany showed output in the country climbing for the second consecutive month by a more-than-forecast 1.2 per cent in March and industrial orders growing by a higher-than-predicted 2.2 per cent. The latest German figures also came ahead of the release next week of first-quarter economic growth figures.
They are forecast to show the eurozone struck in an economic downturn, while the German economy expanded at a modest 0.3 per cent after it shrunk by 0.6 per cent in the final quarter of 2012. Europe's tentative start to the new economic year also came in the wake of a protracted winter, which undercut output in several sectors, notably the building trade.
Still, the European Central Bank last week lowered interest rates to an historic low of 0.5 per cent in a bid to shore up economic confidence in the struggling currency bloc. But cautious optimism about a steady pickup in both the United States and China - the world's two biggest economies - have raised hopes that the German economy might gain momentum as world trade strengthens during the course of the year.
This in turn should offer some support for Germany's key trading partners in the eurozone as they battle to emerge from recession Consumer confidence in Germany is also set to hit the highest level in about six years this month on the back of expectations of higher incomes and falling unemployment.
The more buoyant mood among German households has added to expectations that private consumption will also play a leading role in driving the country's economic growth rate this year. But a decline in industry sentiment surveys, including last month's bigger-than-forecast drop in German business confidence, underlines the uncertainties facing the nation's economy as the eurozone battles to come to grips with its long-running debt crisis. Despite Friday's data showing a rise in German monthly trade in March, the figures also showed the nation's exports to the eurozone plunging by 7 per cent when compared with March last year.
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