German economy stabilising, but slowly

BERLIN: Germany, Europe's top economy, is recovering from its worst recession in 60 years, a closely-watched survey suggested on Tuesday, but any upturn is likely to be gradual and the road to recovery bumpy.

The ZEW index, which measures the confidence of financial market players in the future health of the economy, was broadly stable in October, dipping fractionally to 56.0 from 57.7 in September.

This was well above the long-term average of 26.7 for the series but slightly worse than analysts surveyed by Dow Jones Newswires had forecast.

"The assessment of the financial market experts reflects the prevalent opinion. The economy will improve only gradually," said the ZEW institute's president Wolfgang Franz.

"The assessment of the current economic situation in Germany is still very poor and is only slowly improving," the institute added.

A sub-index measuring the current state of the economy nosed higher but by only 1.8 points.

Nevertheless, indications have been growing recently that the German economy is over the worst of the economic crisis.

Business confidence surveys have been better than expected and so-called "hard" data, showing the current state of the economy, have also improved in recent months.

That has prompted Chancellor Angela Merkel to upgrade her view of likely output this year, forecasting a slump of four to five percent this year, rather than the six percent officially projected by the government.

According to the Bild daily, Berlin will officially hike this forecast to minus 4.5 percent when it unveils new projections on Friday.

The government was due to present its forecasts on October 21, but the date has been brought forward, Bild reported.