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Confidence among German investors about the economy’s future prospects cooled markedly in February, according to a closely-watched survey, as disappointing domestic data and jitters ahead of upcoming elections unsettle investors.
The Centre for European Economic Research (ZEW)’s index of future expectations dropped sharply from 16.6 to 10.4, in contrast to forecasts of a modest decline to 15.
ZEW’s index tracking assessments of the current state of the economy also disappointed, though the decline was much less severe. The indicator fell to 76.4, from last month’s 77.3.
Official data released this morning confirmed that Germany’s economy expanded by a healthy 1.9 per cent in 2016, but numbers released last week suggested a bad end to the year for the country’s powerhouse industrial sector.
ZEW president Achim Wambach said:
The downturn in expectations is likely to be the result of the recently published unfavourable figures for industrial production, retail sales and exports.
Political uncertainty regarding Brexit, the future US economic policy as well as the considerable number of upcoming elections in Europe further depresses expectations. Nevertheless, the economic environment in Germany has not significantly worsened.