German investor confidence plunges to lowest since January

INVESTOR confidence in Germany’s economy plummeted to its lowest level since January following a disappointing run of data and the recent turmoil on global stock markets.

An expectations gauge compiled by the ZEW institute fell to 19.2 in August from 41.8 in July, a release on Tuesday (Aug 13) showed. That was much lower than the 34 forecast in a Bloomberg survey. An index of current conditions also declined more than expected.

“The economic outlook for Germany is breaking down,” ZEW President Achim Wambach said in a statement. “It is likely that economic expectations are still affected by high uncertainty, which is driven by ambiguous monetary policy, disappointing business data from the US economy and growing concerns over an escalation of the conflict in the Middle East.”

Figures published in recent weeks have painted a gloomy picture for Europe’s largest economy, where output unexpectedly shrank by 0.1 per cent in the second quarter, and July readings of private-sector activity and the business climate offered little comfort.

There have been some bright spots: Numbers last week showed factory orders and industrial production rose in June. But persistent weakness in exports underscore the country’s ongoing manufacturing woes, while bankruptcies are also on the rise. 

Germany is facing the prospect of hardly any economic expansion this year, according to a Bloomberg survey of economists. BLOOMBERG