German Forecast To Offer Signs If Ailing Economy On The Mend

The German government is expected to raise its latest growth forecasts on Wednesday as Europe's crisis-hit top economy shows tentative signs it is finally turning a corner

Frankfurt, (UrduPoint / Pakistan Point News - 24th Apr, 2024) The German government is expected to raise its latest growth forecasts on Wednesday as Europe's crisis-hit top economy shows tentative signs it is finally turning a corner.

Improvements in key indicators, from industrial output to business activity, in recent months suggest that a hoped-for recovery may be slowly under way.

The German economy shrank slightly last year, hit by soaring inflation, a manufacturing slowdown and weakness in trading partners, and has acted as a major drag on the 20-nation eurozone.

Initial hopes for a strong rebound this year were dialled back as the economy languished, with Berlin in February slashing its growth forecast to just 0.2 percent. The International Monetary Fund followed suit last week and is now expecting the same figure.

But improving signs have fuelled hopes the lumbering economy -- while not about to break into a sprint -- may at least be getting back on its feet.

On Wednesday, a closely-watched survey from the Ifo institute showed business sentiment rising for a third consecutive month in April, and more strongly than expected.

ING economist Carsten Brzeski said the survey pointed to "the return of optimism", and "strengthens the view that the German economy has left the trough behind".

Last week the central bank, the Bundesbank, forecast the economy would expand slightly in the first quarter, dodging a recession, after earlier predicting a contraction.

And on Tuesday a survey showed that business activity in Germany had picked up.

The HCOB Flash Germany purchasing managers' index published by S&P Global registered a figure of 50.5 in April, up from 47.7 in March, returning to growth for the first time in 10 months.

Any reading above 50 indicates growth, while a figure below 50 shows contraction.

But slight improvements in indicators do not mean the government will make any big changes to its forecasts, with analysts still expecting tepid growth this year.

Economy Minister Robert Habeck will present the new projections at 2:15 pm (1215 GMT).