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Will German rebound help euro zone?

Monday, November 24, 2014 - 01:57

German business sentiment rebounded in November, breaking a streak of six straight declines. It's a sign Europe's largest economy is gaining momentum again. But as Sonia Legg reports it'll take more than that to get the euro zone's economy back on its feet.

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A rebound in German business sentiment after six straight months of decline was welcome news. Europe's largest economy had narrowly avoided a recession in the third quarter. A low euro helped. But Klaus Wohlrabe from the IFO Institute says Christmas business should be good. (SOUNDBITE) (German) IFO INSTITUTE ECONOMY EXPERT, KLAUS WOHLRABE, SAYING: "Consumption has been a pillar for the entire year so far and this will be the case for the German economy in the fourth quarter, too. People's income and employment prospects are very good. In the retail sector we are seeing that expectations have taken a positive direction." But German markets were largely indifferent - the Dax opened almost unchanged. Robert Halver is from Baader Bank (SOUNDBITE) (German) HEAD OF CAPITAL MARKET ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "There are still ongoing crises and although IS and Ebola no longer dominate the news, the Ukraine-Russia conflict is still very present. So I would call the situation a 'recovery position.' It's not positive because it's a smoldering fire but people can live with it because the German economy is looking more and more towards the United States. India, China and Indonesia are pretty stable too." Germany's fortunes have a significant impact on the rest of the euro zone. But CMC Markets Michael Hewson says it'll take more than one positive piece of data to solve the region's problems. (SOUNDBITE) (English) CMC MARKET COMMENTATOR, MICHAEL HEWSON, SAYING: "Later this week we are going to get the latest unemployment figures out of the wider EU - it's still expected to remain very, very high. Italy is a concern, France is a concern - the debt burdens of the peripheral countries still remain a concern. I really would like to see some more significant data points over the next few weeks before we suggest we are over the worst." The ECB has promised to act to combat worryingly low inflation But there is a downside to Germany's revival - it may make them even less likely to agree to a cash injection. And many see that as the only way to build a better economy in Europe

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Will German rebound help euro zone?

Monday, November 24, 2014 - 01:57