The mood among German financial investors has substantially brightened, a key economic indicator shows. They expect Europe's largest economy to slow down a bit before making a strong rebound early next year.
In December, the Center for European Economic Research (ZEW) economic indicator rose by a staggering 22.6 points, from minus 11.5 points in November to plus 6.9 points this month, ZEW said Tuesday.
The indicator, which gauges the opinions of German financial market experts, rose stronger than predicted by economists who had forecast only a modest increase to minus 12 points in a poll carried out by the Reuters news agency.
"While German growth is expected to cool off through the rest of the year, investors think the country will be spared an outright recession," ZEW director Wolfgang Franz said in a statement. He added, however, that this depended on the eurozone debt crisis not deepening again.
The highest ZEW indicator reading in more than six month was caused by upbeat expectations about the future, as well as by more favorable perceptions about current developments.
The center's sub-index fathoming present moods rose from 5.4 points in November to 5.7 points now. The optimism of German financial investors contrasts with predictions about economic development made by Germany's central bank. In its latest report, the Bundesbank forecast the German economy to shrink in the final quarter of 2012, and sees only meager growth of 0.4 percent for the whole of 2013.