Deep decline in German investor sentiment
Source: Bloomberg News |
June 20, 2012, Wednesday
|
Print Edition
Print Edition
GERMAN investor confidence fell the most in 14 years in June as Europe's debt crisis weighed on the economic outlook.
The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, plunged to minus 16.9 from 10.8 in May. That's the steepest decline since October 1998. Economists forecast a drop to 2.3, according to the median of 38 estimates in a Bloomberg News survey.
Germany's economy, which grew 0.5 percent in the first quarter, is losing momentum as austerity measures across Europe curb demand for its goods and damp confidence. Exports, factory orders and industrial production all fell in April and business sentiment waned in May. The DAX share index has dropped 12 percent in the last three months.
The report "clearly shows a general sense of panic amongst investors," said Annalisa Piazza, a fixed-income strategist at Newedge Strategy in London. It points to "risks of a deeper-than-expected recession" in the 17-nation eurozone, she said.
ZEW's gauge of sentiment in the eurozone fell to minus 20.1 from minus 2.4. A gauge of current conditions in Germany fell to 33.2 from 44.1.
Rising wages and unemployment at a two-decade low are bolstering domestic spending, helping to insulate Germany from the debt crisis. German companies are also compensating for weaker European demand by tapping faster-growing markets elsewhere.
The report is "a strong warning against a too optimistic assessment of Germany's economic perspectives in the remainder of this year," said ZEW President Wolfgang Franz. "The risks of a pronounced decline in economic activity in countries with close trade ties to Germany are very clear."
The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, plunged to minus 16.9 from 10.8 in May. That's the steepest decline since October 1998. Economists forecast a drop to 2.3, according to the median of 38 estimates in a Bloomberg News survey.
Germany's economy, which grew 0.5 percent in the first quarter, is losing momentum as austerity measures across Europe curb demand for its goods and damp confidence. Exports, factory orders and industrial production all fell in April and business sentiment waned in May. The DAX share index has dropped 12 percent in the last three months.
The report "clearly shows a general sense of panic amongst investors," said Annalisa Piazza, a fixed-income strategist at Newedge Strategy in London. It points to "risks of a deeper-than-expected recession" in the 17-nation eurozone, she said.
ZEW's gauge of sentiment in the eurozone fell to minus 20.1 from minus 2.4. A gauge of current conditions in Germany fell to 33.2 from 44.1.
Rising wages and unemployment at a two-decade low are bolstering domestic spending, helping to insulate Germany from the debt crisis. German companies are also compensating for weaker European demand by tapping faster-growing markets elsewhere.
The report is "a strong warning against a too optimistic assessment of Germany's economic perspectives in the remainder of this year," said ZEW President Wolfgang Franz. "The risks of a pronounced decline in economic activity in countries with close trade ties to Germany are very clear."
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