After a tumultuous year in 2008 and grim first quarter in 2008; world economies started to show improvement starting from the second quarter, where the pace of progress continued into the third quarter, where most major economies returned to growth. It seems that recovery is gathering strength ahead of the New Year, where major economies are expected to show a full recovery.
Today, after the release of Germany's GDP for the third quarter, which grew 0.7% in the three months ending September from 0.4% in the second quarter, is still continuing its progress in the last quarter of the year, as indicated by the data released.
IFO business climate for November came in at 93.9, higher than the revised 92.0; while current assessment rose to 89.1 from revised 87.4 from 87.3. Also, IFO expectations for November came at 98.9 from 97. The confidence report climbed to the highest level in 15 months, suggesting that the economy is back on the right track.
The recovery witnessed in global demand helped companies to increase their sales domestically and overseas. German PMI manufacturing for November inclined to 52.0, higher than the prior 51.0; while PMI services surged to 51.5 from 50.7. Some companies stopped laying off employees and raised their forecasts for sales in the last quarter. DAX share index has advanced 20% this year, reflecting the improvement and investor's confidence in the economy.
The gigantic economy lead the recovery in the euro zone causing the pace of contraction to ease to 0.2% in the second quarter, before showing positive 0.4% growth in the third quarter.
Angela Merkel, announced an 85 billion euros stimulus plan to boost spending and growth. The ECB cut the interest rate to 1% and launched 60 billion euros bonds purchase program as well. It is clear that the economy is reaping the fruits of the wise monetary and fiscal interventions.
IW economic institute projects the German economy will shrink 4.5% in 2009, before growing to 1.5% next year.
Nevertheless, some economists are seeing that the recovery is boosted by stimulus and the economy still needs more time to fully recover, because there are some underlying problems in the economy such as high unemployment rates and price deceleration.
