Investor Confidence in German Economy Hits Lowest Level Since January
Investor confidence in the outlook for the German economy has plummeted to its lowest level since January, following a series of disappointing economic data and recent turmoil in global stock markets. This is indicated by a study published on Tuesday by the ZEW Economic Research Institute.
The ZEW economic sentiment index fell to 19.2 points in August, down from 41.8 points the previous month, while analysts had anticipated a decline to around 30.6 points. The last time expectations deteriorated to a similar level was in July 2022.
Furthermore, the ZEW index measuring the current situation also declined beyond expectations, dropping to minus 77.3 points in August from minus 68.9 points the month prior.
“The outlook for the German economy is worsening. Economic expectations may still be influenced by heightened uncertainties stemming from ambiguous monetary policy, disappointing economic data from the U.S., and increasing fears regarding the escalation of conflict in the Middle East,” commented Achim Wambach, president of ZEW.
He explained that economic expectations for the Eurozone, the U.S., and China have significantly deteriorated. As a result, expectations for the German economy, which is heavily reliant on exports, have also been affected.
Recent data points to bleak prospects for Germany, the largest economy in Europe, which experienced an unexpected decline in GDP in the second quarter of 2024, with economic data from July providing little reason for optimism.
The industrial sector has been a weak point in recent months, with sluggish global demand and high interest rates impacting activity. However, the slowing inflation and rising household incomes have raised hopes that recovery will be driven by consumption in the coming months.
