Is Germany Finally Bouncing Back?

Like many German companies, Glashütte Döbern, a maker of fine crystal glassware, has had a tough couple of years. Following the 9/11 terror attacks, orders slumped from the United States, its largest market. But business is finally starting to sparkle again at this 35-year-old company, which employs 130 people at its factory in the eastern German state of Brandenburg. Orders are up not only domestically and from the U.S., but also from France, Spain, Britain — even China. Instead of closing for its annual vacation in July and August, the company went on three shifts to keep up with the influx of new business. "We see the light at the end of the tunnel," says a relieved Frank Mader, co-owner and president, surveying the company's prospects. "It's looking better than even five months ago. The world economy is picking up again."

After three years of stagnation, Germany is finally taking its first tentative baby steps toward economic recovery. So far, there are few definitive statistics to support the notion that the entire economy is growing again. But the vignettes feel like they're attaining a critical mass. METRO Group, the country's largest retailer, for example, forecasts sales will rise 5.5% this year. Porsche sold 60% more sports cars in Western Europe in July than it did a year ago. BMW added 2,100 jobs at German factories to meet an expected increase in production. And an August opinion poll by NFO Infratest showed that Germans were optimistic about the future of the economy for the first time since last September.

Consumption is also beginning to inch up. GfK, a firm that tracks consumer trends, said its index of consumption rose from 4.2 in July to 4.5 in August, signalling that Germans are expected to spend more. "The digital sector is booming," says Marcus Neuhaus, manager of a ProMarkt electronics and appliance chain store on Berlin's trendy Kurfürstendamm. According to Neuhaus, sales of high-end TVs costing between €4,000 and €7,000 are up 15-20% this year. Digital cameras, laptops and even €800 espresso machines are selling fast. "Price is a secondary consideration," Neuhaus says. "People want the latest technology."

While the DAX stock index has shot up 60% from a seven-year low in March, two leading indicators are also pointing to an upswing in the second half of the year. The ZEW Center for European Economic Research reported that its survey of financial analysts and institutional investors had risen for the eighth straight month in August. And the widely watched Ifo index of business confidence in Western Germany rose from 89.2 in July to 90.8 in August, its fourth consecutive rise. The Munich-based economic institute surveys 7,000 executives each month about production, orders and inventories. "We've turned the corner," says Gernot Nerb, an economist at Ifo. "We're in the early phase of the upturn."