German investor confidence worsens as global trade woes mount

[FRANKFURT] Investor confidence in Germany's growth outlook unexpectedly weakened in May for the first time since October, underlining the fragility of Europe's largest economy as it struggles to overcome a slowdown and global trade tensions worsen.

A gauge measuring prospects for the next six months dropped to minus 2.1 in May. Economists had expected a slight increase to 5 from 3.1 in April.

A resurgent trade dispute between the US and China risks spilling over to German companies, and knocking the economy back after nascent signs that it has started to stabilize. Stocks have tumbled -- the DAX Index slid almost 3 per cent last week.

"Financial market experts continue to expect restrained economic growth in Germany for the next six months," ZEW President Professor Achim Wambach said. The escalation in the trade dispute "increases the uncertainty regarding German exports -- a key factor for growth."

Germany reports its first-quarter GDP figures on Wednesday, with analysts in a Bloomberg survey predicting an expansion of 0.4 per cent after a stagnant end to 2018, echoing the rebound in the euro zone as a whole. Still, Bundesbank President Jens Weidmann has warned that the better figures might reflect temporary factors such as mild weather and he sees no "comprehensive" improvement so far.

BLOOMBERG