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Economy in Brief

According to the IFO data that were released yesterday, the balance of opinion among German business regarding the outlook six months ahead improved slightly in May from April, but remains much less positive than that of the financial community. Among the business community, pessimists outweighed optimists by 26.0% in May, down from 30.1% in April. Last week, the ZEW institute reported that the optimists among institutional investors and analysts exceeded pessimists by 31.1% in May, up from 13.0% in April. The opinions among the financial types tend to be more volatile than those among the business community. Since the data were first recorded, January, 1991 in the case of the IFO and December, 1991 in the case of the ZEW, the percent balances of opinion for the IFO have ranged from plus 14.2% to minus 44.2% while those for the ZEW have ranged from plus 89.9% to minus 63.9%. Data from the two series are shown in the first chart.

Today, the final GDP data for the first quarter were released. GDP in Germany declined at an annual rate of 14.4%, the biggest fall recorded since the data were started in 1970. Declines in exports of goods and in business investment were largely responsible for the dramatic fall. Consumption increased slightly and the decline in imports was a plus for the economy. The actual percent decrease in GDP from the fourth quarter of 2008 to the first quarter of 2009 was -3.8%. Of the -3.80 percentage points, net exports of goods and services accounted for -2.2 points, business investment, -2.0 and consumption, +0.3 points. The contributions of these three items to changes in total GDP over the past five years are shown in the second chart.

OPINION SURVEYS  % Bal May 09 April 09 Mar 08 Feb 09  Jan 09
IFO           
Climate Headline  -32.1 -33.1 -36.2 -35.4 -34.4
Current Conditions -38.0 -36.1 -37.7 -34.6 -29.8
Expectations              -26.0 -30.1 -34.7 -36.1 -39.0
ZEW          
Expectations        31.1 13.0 -3.5 -5.9 -31.0
Gross Domestic  Product (SAAR) Q1 09 Q4 08  Q3 08 Q2 08 Q1 08
Total -14.36 -9.61 -2.15 -2.00 6.25
Exports -41.07 -28.58 -4.25 0.64 8.12
Imports  -27.69 -16.08 22.00 -7.41 16.07
Gross Investment -33.91 2.18 26.41 -17.72 37.84
Consumption 1.64 -0.89 -.86 -1.08 0.77
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