german zew feb 19 investor confidence preview
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A BETTER FUTURE WHILE THE PRESENT WORSENS
  • Feb ZEW Economic Sentiment Seen Rising to -14.0 From -15.0
  • Current Conditions Set to Fall to 23.0 from 27.6

 

Frankfurt, 15 Feb (LS News) – This month’s ZEW survey is expected to show once again that investors are slightly less downbeat about Germany’s future but are even more concerned about the current economic environment in Europe’s largest economy. The ZEW is scheduled to announce the survey results Tuesday at 1000 GMT.

 

A poll of economists said the ZEW’s forward-looking economic sentiment reading is set to rise to -14.0 from last month’s reading of -15.0.

 

The current conditions component is expected to fall for the fifth consecutive month, with a consensus forecast of 23.0 from 27.6 prior. The mood measure for the current environment has fallen by nearly two-thirds since September and plunged to its lowest level in four years last month.

 

The January ZEW indicator of Eurozone economic sentiment was up slightly to -20.9 from -21.0.

ZEW Could Mirror Sentix’s Mixed Picture


Sentix’s February survey of investors released earlier this month showed a rise in expectations, but the current conditions component fell for the fourth straight month to its lowest level since December 2014.

 

“The loss of momentum remains remarkable,” Sentix noted.

 

Oxford Economics Chief German Economist Oliver Rakau said, “I expect the ZEW to follow the Sentix and show a modest increase in expectations.

 

“On the upside, there are increasingly signs that Chinese stimulus has begun to feed through to the real economy with loan growth picking up," Rakau said, citing more positive rhetoric in the US-China trade-standoff as support for investors’ outlook.

 

“The latest eurozone car registration numbers are bolstering hopes that the auto sector can leave behind its 2018 troubles and see a significant bounce in Q1, which should also support the economy more broadly,” he said.

 

While future prospects may have brightened for investors, there has been no time like the present given the current combination of domestic and international factors confronting the German economy.

 

“On the downside, the no-deal Brexit risks have certainly not declined, and US car tariffs remain a risk. Moreover, the ZEW is likely to show a further decline in the assessment of the current situation given the backdrop of persisting disappointments from backward looking hard data such as the reported stagnation of the German economy in Q4 2018,” he said.

 

The German government reported quarterly GDP growth of 0.0pct in the fourth quarter on Thursday, but the economy grew slightly, just not enough to round up above the flat reading. The sideways movement means Germany avoided a recession in the second half of last year after economic activity fell by -0.2pct in the third quarter. Germany is scheduled to release more detailed information about fourth quarter growth in on 22 February (0700 GMT).

 

German businesses are expected to provide further evidence on the direction of the economy during the coming week. The latest poll of purchasing managers is due on 21 February (0830 GMT), and the next day the Ifo economics institute is slated to publish the results of its latest survey (0900 GMT)

 

--- Eric Culp

 

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