German investor sentiment slips slightly

21st April 2015, Comments 0 comments

Investor sentiment in Germany fell for the first time in six months in April on concerns about weak global growth, a survey showed Tuesday, but analysts were confident that recovery in Europe's biggest economy remains intact.

The widely watched investor confidence index calculated by the ZEW economic institute slipped by 1.5 points to 53.3 points in April, disappointing analysts' expectations for a further increase this month, ZEW said in a statement.

But the think tank insisted that the shallow dip was no cause for alarm.

"The German economy is in good shape. A stable labour market and increasing wages are strengthening confidence and boosting consumption," said ZEW president Clemens Fuest.

"However, the current weakness of the world economy is dampening export prospects and reducing the scope for further improvements of the economic situation in Germany," Fuest explained.

For the survey, ZEW questions analysts and institutional investors about their current assessment of the economic situation in Germany, as well as their expectations for the coming months.

And confidence about the current situation is improving sharply.

The sub-index measuring financial market players' view of the current economic situation in Germany jumped by 15.1 points to 70.2 points in April, its highest level since July 2011.

"The April reading of ZEW only disappointed at first glance," said BayernLB economist Stefan Kipar.

"Overall, the data are positive. The German economy remains on a recovery path and the framework conditions -- a weak euro and low oil prices -- continue to be favourable," Kipar said.

"Germany is doing fine," agreed Berenberg Bank economist Holger Schmieding.

"In fact, it may now be doing so well that some observers believe it can't get much better," he said.

"Strong tailwinds from a robust labour market, low oil prices and a competitively priced exchange rate as well as the reform successes in countries such as Spain are propelling the German economy forward," Schmieding said.

Natixis economist Johannes Gareis said that "at this stage we do not think that the fall in investor confidence is of particular concern."

But Capital Economics economist Jennifer McKeown was more cautious.

"April's fall in investor sentiment suggests that fears over Greece are starting to dent confidence in the German economic recovery," she said.

"While German consumers have responded well to falling (and negative) inflation and the robust labour market, exports have yet to rise sharply despite the weakness of the exchange rate. And a further exacerbation of the Greek crisis, involving another default or even Grexit, is a key threat to the recent recovery in business sentiment and hence activity," McKeown cautioned.


© 2015 AFP

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