Saturday, January 22, 2011

Recovery and Catastrophe; the two track eurozone

The German economy is definitely showing signs of life. The IFO business climate index hit 110.3 points in January. It is now at its highest level since since it started recording business sentiment 20 years ago. France and Belgium also produced similar positive results in recent business surveys.

The IFO index is a survey based measure of economic activity. German enterprises are asked how they feel about their world, and these views are ranked in an index. Therefore, the IFO survey is a leading indicator of economic activity.

The Eurozone economies are now on two quite different tracks. In the centre, the recovery is well underway. However the periphery is excluded from the recovery due to a pernicious mix of banking sector and fiscal crises.

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