The Ifo indicator for the economic climate in the Eurozone rose in January for the fourth time in succession. In a separate survey reported on Wednesday, confidence in the world economy ebbed in February on concern worsening government finances in some European nations will derail the global recovery, according to a Bloomberg survey of users on six continents.

The Ifo institute for economic research, based at the University of Munich, reported that both the assessments of the current economic situation as well as the expectations for the coming six months brightened noticeably in the Eurozone. The latest results are an indication that the economic recovery that became evident from mid- 2009 will continue in the first half of 2010. The economic climate improved particularly in Germany and Italy, as well as in Austria, Belgium and the Netherlands. In contrast, the indicator worsened in France, Portugal, Slovenia, Greece and Cyprus. Greece and Cyprus are the only countries in the Eurozone in which the World Economic Survey (WES) experts see a further worsening during the coming six months.

In all other countries of the Eurozone the expectations are decidedly optimistic. In contrast to the expectations, the current economic situation is assessed as improved over the previous quarter in many Eurozone countries, but remains at still quite an unfavourable level. The WES experts continue to give poor marks to the present economic situation in Ireland, Spain and Portugal. In Greece the present situation even worsened further.

Inflation expectations for 2010, at 1.3% on average for the year, are somewhat above the reference value for 2009 (0.7%), but still clearly below the medium-term target level of the ECB. In the course of the coming six months slightly increasing prices are expected. A growing number of WES experts expect that key interest rates will be increased in the coming six months. An even more pronounced increase is expected in the next six months for the long-term interest rates. The US dollar is viewed as undervalued in relation to the euro.

The 1st quarter 2010 Eurozone results, are based on the responses of 286 economists. WES is conducted in co-operation with the International Chamber of Commerce (ICC) in Paris.

Global confidence

Bloomberg reports that the Bloomberg Professional Global Confidence Index dropped to 54.9 from 66.6 in January, when the reading was at the highest level since the series began two years ago. The index exceeded 50 for a seventh month, which means there were more optimists than pessimists. The survey was conducted last week, before Germany and other European Union nations signaled they may support Greece’s government finances.

Some 2,486 Bloomberg users were survey between Feb. 1st and Feb. 5th. Bloomberg said since the previous survey, China unexpectedly raised reserve requirement ratios for lenders, the Group of Seven finance ministers pledged to continue economic stimulus measures and a report showed the US economy expanded at the fastest pace in six years last quarter.