The German consumer is conservative with low expectation of prospects for a stronger economy - 61% actually believe the situation will worsen due to high unemployment. Most citizens save 11% of income and GDP growth has been less than 1% a year. Germany's strong point is the exportation of industrial goods.
Prospects for EWG are good because of this low expectation. Any marginal improvement will positively affect markets. The overall market isn't expensive at 14x's earnings. The top holdings in EWG are world-class multinationals that are closely tied to Asia rather than crawling Germany. Holdings are Siemens (SI), Daimler Chrysler (DCX), and Bayer (BAY), to name a few. The German economy is a huge restructuring play that could take time for results.