Berlin - After plunging into its worst recession since World War II, the German economy appears to be showing signs of the first green shoots of a recovery. German exports posted an increase in March - the first time that indicator had done so in six months - according to data released Friday. That comes amid a slew of better-than-forecast figures and economic sentiment surveys that have fuelled hopes that the downturn in Europe's biggest economy may have started to bottom out.
The 0.7-per-cent rise in March exports (analysts had forecast a 1.3-per-cent decline) coincided with data showing a free fall in industrial production had come an end and that output in Germany's building sector had rebounded by 7.6 per cent.
"The green shoots are there," said ING Bank economist Carsten Brzeski. "All important confidence indicators have stabilised and improved, at a low level, in recent weeks," he said.
But Germany still faces a long haul to emerge from the recession, especially given the recent beating the economy has endured.
As the world's biggest exporter, Germany has proven to be particularly vulnerable to the sharp fall in global trade triggered by the world economic slowdown.
However, the release of the latest German trade data came in the wake of figures showing a rise in foreign orders, which helped to boost the nation's key factory orders by a surprise 3.3 per cent in March. That was the first increase for that indicator in seven months.
Significantly, the surprise jump in German industry's order books was the first sign of a pickup from key hard data for the country since it slumped into recession last year. Analysts had forecast a 0.8-per-cent fall in orders.
The order book and export data followed a string of key economic sentiment surveys that have pointed to German economic growth regaining momentum by the end of the year on the back of hefty interest rate cuts and the government's stimulus packages.
German business confidence hit a five-month high in April, the Munich-based Ifo economic research institute reported when it released its forward-looking business confidence index last month. The index showed confidence rebounding from a record low of 82.1 points in March to 83.7 points this month.
The round of more positive economic news out of Germany comes as the country gears up for a national election in September.
But despite evidence that the dramatic world economic slump might be starting to plateau, this year's German election is likely to be held against the backdrop of rising unemployment and fallout from the recession.
In addition, hopes that economic growth might gain traction by the end of the year came as a downbeat first-quarter reporting season for corporate Germany drew to a close with the nation's leading companies battling to emerge from the recession.
"What we are experiencing is not a normal economic downturn, but the steepest fall in the world economy since the crisis of 1929," Siemens' chief Peter Loescher told the electronics giant's shareholders last month. Moreover, unemployment has continued to climb despite the large number of companies taking advantage of government subsidized short- term work programs, which have allowed businesses to cut production without throwing employees onto the dole queues.
As a result, this raises the risk of Chancellor Angela Merkel's government heading into the election against the backdrop of sharply rising unemployment.
Seasonally adjusted unemployment climbed by 58,000 to 3.463 million in April, after rising by 69,000 in March, the German Labour Office said. That pushed the unemployment rate up to 8.3 per cent from 8.1 per cent in March.
The threat of rising dole queues across Germany is also a reminder that, despite signs the recession is bottoming out, a sharp contraction of the national economy is unlikely to be avoided this year.
The German government warned of a surge in unemployment after it slashed its 2009 economic projections, saying it now expects the nation's economy to shrink by a dramatic 6 per cent this year.
Economists expect data to be released next Friday to show the recession tightening its grip in Germany during the second quarter, with the nation's economy shrinking by 3 per cent in the three months to the end of March. This compared to a 2.1-per-cent slump during the first half of the year.
A 3-per-cent second-quarter contraction in German GDP would translate into a 6-per-cent slump year-on-year in the three months to the end of March, economists say.
Meanwhile, the government predicts that unemployment will jump by 900,000 next year with economic forecasters warning that the global economic crisis now risked being transformed into a worldwide jobs crisis.
