Confidence among German investors grows despite recession worries
The mood among German investors has improved despite the economy teetering on the edge of recession, with a closely-watched gauge beating economists’ expectations.
Read more: Germany to tumble into recession, says Ifo think tank
The economic sentiment indicator from German research institute ZEW gave a score of minus 22.5 in September, rising from minus 44.1 in August.
The improvement took the gauge back to the level of minus 21.1 seen in June. Economists had been expecting a reading of minus 37.
Nevertheless, a score of below zero indicates that investors overall feel negatively about the economy. The reading remains well below the long-term average of 21.5.
“The rise of the ZEW indicator of economic sentiment is by no means an all-clear concerning the development of the German economy in the next six months,” said ZEW president Professor Achim Wambach.
The German economy contracted in the second quarter as lower demand from China and a slowdown in global trade due to the US-China tariff war took their toll. Brexit negotiations and a general global economic slowdown have provided a tough backdrop.
“The outlook remains negative,” said Wambach. “However, the rather strong fears that financial experts had in the previous month regarding a further intensification of the trade conflict between the USA and China did not come true.”
The ZEW survey showed that investors’ views of the current situation worsened in September, however, by 6.4 points to minus 19.9, its lowest score in nine years.
Read more: ‘We had to respond’: ECB chief economist defends Eurozone stimulus
Yet Wambach said there was some hope for German growth. “There is still hope that a no deal Brexit can be avoided. In addition, the European Central Bank is attempting to reduce the economic risks in the eurozone by further easing its monetary policy.”
(Image credit: Getty)