German investor confidence surges

7th December 2004, Comments 0 comments

7 December 2004 , BERLIN - German investor confidence posted a surprise jump in December as relief over falling oil prices helped to offset concerns about the impact of a surging euro on growth in Europe's biggest economy. Released Tuesday by the Mannheim-based Centre for European Economic Research, the so-called ZEW index rose to 14.4 points in December after plunging to near a two-year low in November at 13.9. This month's rise bringing to an end four consecutive monthly falls in the index. Economists ha

7 December 2004

BERLIN - German investor confidence posted a surprise jump in December as relief over falling oil prices helped to offset concerns about the impact of a surging euro on growth in Europe's biggest economy.

Released Tuesday by the Mannheim-based Centre for European Economic Research, the so-called ZEW index rose to 14.4 points in December after plunging to near a two-year low in November at 13.9.

This month's rise bringing to an end four consecutive monthly falls in the index. Economists had expected the index to decline again in December and drop to about 10 points.

After a year of fading growth in Germany, the latest ZEW indicator points to the country's economy remaining on a very modest expansion path as it enters 2005.

"In the light of the considerable changes in exchange rates and oil prices, future economic development is still risky," said ZEW president Wolfgang Franz.

But he went on to say: "There is no reason to revise expectations of a slight economic recovery next year".

The release of the ZEW report followed publication Monday of data showing an unexpected rise in German factory orders, largely a result of big domestic contracts.

Based on a survey of 300 institutional investors and analysts, the ZEW survey acts as a curtain raiser to the release later in the month of the more broadly based and closely watched German Ifo business confidence survey.

The ZEW institute said in piecing the responses to the survey together the recent positive and negative economic developments were almost equal.

Indeed, while the plunge in the dollar had fuelled concerns about the outlook for Germany's export machine, the recent fall in oil prices had boosted confidence among those responding to the survey and consequently helped to prevent a further decline in the indicator.

The December ZEW survey was taken against the backdrop of the euro hitting a series of all-time highs against the dollar along with growing friction between Europe and United States over the dollar's sharp fall against the common currency.

The greenback cascaded down to a new record low of USD 1.3469 against the euro in the run-up to the release of the ZEW report which left the common currency within reach of the key USD 1.35.

Underscoring the fragility of Germany's economic upswing, the ZEW gauge measuring investors' perceptions of current economic conditions declined from -57.8 points to -64.2 points.

It was a similar picture among Germany's partners in the 12-member eurozone with the ZEW gauge of current conditions dropping to minus 30.2 points from minus 25.8 points and the component measuring expectations for the currency bloc dropped to 17.7 from 22.1.

DPA

Subject: German news 

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