German business sentiment up, Japan raises outlook
Written on May 26, 2009
A key measure of German business sentiment rose in May and Japan raised its economic outlook for the first time in three years in further signs the worst of the global recession may be over, with stability seen later in 2009.
News of North Korea’s second nuclear test, a significantly more substantial device than used in the first test in October 2006, was shrugged off by European and Asian markets quietened by British and U.S. holidays on Monday.
Analysts said the test was more a negotiating tactic than an imminent threat to security on the peninsula.
German think tank Ifo’s business climate index, based on a poll of 7,000 firms, rose to 84.2 in May from 83.7 in April but below a consensus forecast for 85.0.
“This is a further clear signal that the German economy’s tailspin has ended. The recession has lost its velocity. It could even be over by the autumn,” Commerzbank economist Joerg Kraemer said, adding: “No one should overestimate the strength of the upturn. It will be an expansion without any real power.”
JAPAN, GERMANY FORESEE IMPROVEMENT
In Tokyo, the government raised its outlook for Japan’s economy for the first time in three years, saying the pace of recession was slowing as exports and industrial output appeared to be near the bottom.
Previously, the government had said the economy was worsening rapidly and in a severe state paydayloans.
Separately, Bank of Japan governor Masaaki Shirakawa also said both the Japanese and world economies appeared to be bottoming out but any recovery would be mild because it would take time to get rid of the excess of boom years.
European Central Bank governing council member and German Bundesbank president Axel Weber said there were growing signs the economic decline in Germany and euro zone was ebbing.
But those signs were sporadic and should not be overplayed, although the impact of government stimulus programs would hopefully build through the rest of the year, he said.
“There is definitely hope that the euro zone economy will gradually stabilize in the later part of 2009.”
Market regulators in China and Australia said they would relax restrictions imposed during the worst of the financial crisis, suggesting they think the market recovery is on solid ground.
THAI RECESSION
Thai officials also said the worst may be over after data showed Thailand’s economy shrank a larger-than-expected 1.9 percent in the first quarter, dragging the country into its first recession in a decade after a plunge in exports.
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