· The ZEW institute which polls institutional investors and analysts regarding their opinions on the current state of the German economy and the outlook six months ahead announced today that in December the balance of pessimists over optimists declined from 28.5% to 19.0%.  Investors and analysts have been more pessimistic than the managers of firms in manufacturing, construction and wholesale and retail trade polled in the broader IFO survey.  The latter began to show a more positive outlook in October and increased their optimism in November when optimists exceeded pessimists by 2.7%. The first chart shows the percent balances of opinions of investors and analysts in the ZEW survey and of the managers in the IFO survey regarding the six months outlook.

· Both investors and managers have shown increasing confidence in their current situations.  However, it is among the investors and analysts that more optimists than pessimists prevail regarding the current situation.  In November, the excess of optimists among managers was 23.4% and among investors and analysts, 53.0%. The excess of optimists among the latter increased to 63% in December.  The second chart shows the percent balances of the investors and analysts in the ZEW survey and the managers in the IFO survey regarding current conditions.

· The improvement in confidence shown by both the IFO and ZEW polls is another sign that, although some slowdown is expected in the first quarter of 2007, there is a growing consensus that the current German expansion is strong enough to weather the impact of a strong euro and a tighter fiscal policy. Several of the six institutes that regularly monitor the German economy, have increased their forecasts for 2007.  The Kiel based IfW institute, for example, announce today that it has doubled its estimate of German growth in 2007 from 1.0% to 2.1%.