German investor confidence plunges in August

23rd August 2011, Comments 0 comments

German investor confidence slumped in August for the sixth month running on worries about the eurozone debt crisis and weak prospects for global growth, the ZEW indicator showed on Tuesday.

The closely watched ZEW economic expectations index fell a whopping 22.5 points to stand at minus 37.6 points, far below the indicators historical average of 26.2 points. In July, it had slipped by just 6.1 points.

"The fear of a recession in the United States together with the downgrade of the credit-rating of (the United States) has further increased macroeconomic uncertainty," a ZEW statement said.

"Due to increased macroeconomic uncertainty, the critical development in the euro zone and the disappointing data on German GDP (gross domestic product) growth in the second quarter of 2011, financial market experts are far more sceptical now with respect to future economic growth," it added.

"This scepticism ... has increased dramatically" in recent months, the statement quoted ZEW president Wolfgang Franz as saying.

"Besides, expectations are in line with the pessimism about economic growth prevailing on stock markets," he added.

The drop was worse than expected, with economists polled by Dow Jones Newswires predicting on average a fall to minus 26 points.

The monthly indicator compiled by the Centre for European Economic Research (ZEW) was based on surveys of 286 analysts and institutional investors, it said.

© 2011 AFP

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