"Financial markets are flickering at the moment because of uncertainty surrounding the discussion about U.S. debt. But Germany's economic outlook remains solid and the past weeks have shown that the recovery in Europe and other important markets will continue, although it won't be very fast."
- Alexander Koch, an economist at Raiffeisen Schweiz
In the time the world's largest economy is trying to avoid a default, Europe's, and German business sentiment is starting to flourish amid tentative signs of economic amelioration in the Eurozone. On Tuesday the ZEW Center for European Economic Research said a gauge of investor and analysts expectations, designed to predict economic developments in the next six months, increased for a third consecutive month in October, hitting 52.8 from 49.6 a month earlier- the highest since April 2010. Analysts, however, expected a figure of 49.2. In addition to that, business confidence measure inched up to the highest in 1 1/2 years, on the back of improvement in the labour market. Nevertheless, the sub-index of current economic situation deteriorated, falling 0.9 points to 29.7, mostly due to the danger of U.S. default and continuous government default, which both can derail growth in 17-nation economy. Amid signs of stabilization in Germany, Europe's powerhouse, German benchmark DAX index traded at all-time high of 8,786.92. Markets are getting more optimistic about future development in the Eurozone, and according German Finance Minister Wolfgang Schaeuble, Europe has turned the corner and will start building up steam in the coming months, while risks have shifted in the direction of emerging markets. Last week, the IMF either lifted or left unchanged the growth forecast for the Eurozone and its four largest members. Currently they are estimating a 0.5% expansion for German economy this year and a 1.4% growth in 2014.
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