The German economy is the largest in the 27 member European Union and business conditions within the nation are a barometer for the fortunes of both the EU and the Eurozone.
On Sunday, Germany holds a general election and Angela Merkel will be looking for a third term as Germany’s Chancellor. If she pulls it off, she will be that rarest of politicians: one to get returned to power in the aftermath of the Global Financial Crisis. Her chances are being helped by divisions within the opposing alliance of left-leaning parties which all but rule out a coalition with Die Linke (The Left), a far left wing party which is likely to poll about 10% of the vote. Pundits expect that Ms Merkel will either see a narrow majority for her coalition or will be able to stand as leader of a “grand coalition” following the vote.
Ms Merkel’s chances will not have been harmed by the latest measure of business confidence. The ZEW index is produced by a think-tank and is based on a survey of 260 analysts and investors and the September survey reported a value of 49.6, up from 42 in August. The reading is the highest ZEW index measure of investor confidence seen since 2010 and is a further indication that the Eurozone recovery is finally beginning to solidify.
Clemens Fuest, president of the think-tank commented: “The financial market experts hold the view that the German economy is still gaining momentum. In particular, the experts' economic optimism has increased due to the improved economic outlook for the Eurozone - although recently released economic data for Germany have fallen short of expectations”.
His comments underline the sporadic nature of the economic recovery, in general, although a general consensus has emerged that things are improving in most major economies.