German investor confidence back on rise in January

[FRANKFURT] Confidence among investors in Europe's largest economy, Germany, picked up in January, a closely-watched survey showed Tuesday, defying political uncertainty across the eurozone.

After plateauing in December, the ZEW institute's investor confidence index increased 2.8 points to 16.6 points in January.

But analysts surveyed by Factset had predicted an even more robust increase to 18.8 points.

"The slight increase is mainly due to an improvement in eurozone economies," ZEW head Achim Wambach said in a statement, "and can also be seen as a leap of faith for 2017".

Economic observers were met with unexpectedly positive figures for German gross domestic product (GDP) in 2016 and for industrial production across the eurozone in November last week, Mr Wambach noted.

At 1.9 per cent, the German economy grew at its fastest rate since 2011 last year, data released last week showed.

The ZEW survey's sub-index measuring sentiment about the present state of the German economy matched that positive surprise, reaching its highest level since July 2011.

Meanwhile, confidence about both the present state and future outlook for the eurozone economy as a whole improved markedly.

January's reading "confirms that optimism about the German economy is gradually returning despite fears about the political situation elsewhere in the eurozone," analyst Jennifer McKeown of Capital Economics said.

Questions hover around the impact the election of Donald Trump in the US and Britain's formal notification that it will begin the process of leaving the EU will have on the German and eurozone economies.

And with elections coming up in Germany, the Netherlands, France, and possibly Italy, 2017 promises uncertainty within the 19-nation single currency area as well.

ZEW's investor confidence index "remains below its long-run average," McKeown said, but "the fact that it is rising again is encouraging".

AFP