German investor morale collapses on coronavirus epidemic
Morale among German investors has fallen through the floor amid the coronavirus outbreak, a survey showed today, as a global recession becomes increasingly likely.
The closely-watched ZEW think tank sentiment survey crashed to minus 49.5 in March from 8.7 in February. This took it to levels not seen since the financial crisis of 2008 and was the biggest drop since the survey began 30 years ago.
ZEW president Achim Wambach said the survey showed financial experts thought it likely Europe’s biggest economy will shrink in the first and second quarters, heralding a recession.
Most investors expected a fall of GDP of around one per cent due to the coronavirus pandemic, Wambach said.
The gloomy predictions came after a torrid 2019 for Germany, which was rocked by the US-China trade war, Brexit talks and problems in the country’s car factories.
Volkswagen said yesterday that it could shut down factories and said 2020 would be very tough.
Priscilla Thiagamoorthy of BMO Capital Markets said: “This is the first timely indicator and suggests that it could take a lot longer for businesses to regain confidence.”
Maddalena Martini, economist at Oxford Economics, said: “The overall picture for the eurozone is now of an economy suffering a deep recession in the first half of the year.”
“The intensity will depend on the scale of the governments’ containment measures and the magnitude and effectiveness of countries’ fiscal responses.”