German investor confidence has risen sharply amid hopes that global growth will remain healthy, while investment and private spending in Europe's biggest economy gain momentum, a survey showed Tuesday.
The ZEW institute's confidence index was up to 15.4 points for January from 4.3 in December.
It was the third consecutive rise in the index, a yardstick of financial experts' outlook for the economy over the next six months. While it remains short of its historical average of 26.8 points, the index has recovered from a trough of minus 7.2 in October.
The brightening outlook reflects hopes that the "dynamic growth" of the German economy will continue, ZEW said.
Gross domestic product grew by 3.6 percent last year. The government is expected on Wednesday to revise upward a forecast made in October that it will expand by 1.8 percent in 2011.
Last year's growth was the fastest since reunification two decades ago, as a rebound in exports was accompanied by strengthening domestic demand.
ZEW said the upturn in investors' outlook may be due to the fact investment is gaining momentum in Germany and beyond — shown by healthy data on industrial orders.
Positive U.S. economic data raise hopes that worldwide growth will remain healthy, it added. Germany is the world's second-biggest exporter after China.
"The currently low level of real interest rates should strengthen demand for capital equipment in Germany," ZEW president Wolfgang Franz said. "Increased job security stimulates private consumption."
German unemployment stood at a relatively low 7.2 percent in December. A government-subsidized short-time work plan allowed employers to reduce production at the height of the financial crisis without cutting employees, and the jobless rate has fallen over recent months.
Investors' evaluation of the current situation in Germany is steady, with a subindex measuring that assessment edging up 0.2 points in January to 82.8, ZEW said.
"Investors' confidence defied the ongoing sovereign debt crisis and also the strong winter," ING economist Carsten Brzeski said. "It looks as if there is almost blind trust in the strength of the German recovery."
The German economy is in fact "cruising along safely" thanks to a diversified export mix, a solid labor market and prospects of improved private spending, he added.
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