- Investor confidence surges to highest level since July 2015
- View of current environment shows stark improvement
- ZEW president says German growth this year expected to remain “below average”
Frankfurt, 21 January 2020 (LS NEWS) – Investors and financial experts reported a surge in optimism about Europe’s largest economy following the latest Sino-US trade agreement and better-than-expected German growth last year, according the monthly survey by German thinktank ZEW.
The euro continued its gains against the dollar following the release of the ZEW report.
The ZEW’s forward-looking headline economic sentiment index for Germany rose sharply in January to 26.7 to handily beat the estimate of 15.0 and last month’s 10.7 result. The current conditions index grew to -9.5 to exceed the market forecast of -13.5 and December’s -19.9 reading.
ZEW economic sentiment for the Eurozone rose to 25.6 from 11.2.
“The continued strong increase of the ZEW indicator of economic sentiment is mainly due to the recent settlement of the trade dispute between the US and China,” ZEW President Achim Wambach said. “This gives rise to the hope that the trade dispute’s negative effects on the German economy will be less pronounced than previously thought.
“In addition, the German economy developed slightly better than expected in the previous year.”
German 2019 GDP growth fell to 0.6pct, its lowest level since 2013, but the performance was higher than most forecasts. A German statistics office official also said a small improvement in growth was expected for the final quarter of 2019.
German economy remains fragile
Despite this month’s unexpectedly sharp rise in the headline German index, Wambach warned that “growth is still expected to remain below average.”
VP Bank Chief Economist Thomas Gitzel said the results should be viewed with caution. “The financial market experts polled by the ZEW allow themselves to be too easily led by the good mood on stock markets.
“The GDP growth rate remains a delicate flower.”
Others, much like the ZEW poll respondents, expressed more optimism. Aila Mihr, a senior analyst at Danske Bank tweeted: “Further increases in both the expectations and current assessment indices bode well that [the] PMI and Ifo rebound will pick up some speed in Q1.”
Any pick-up in Europe’s biggest economy should help reduce demands for even looser monetary policy from dovish members of the governing council at the European Central Bank, which is scheduled to announce its latest rate decision Thursday.
- Investor confidence surges to highest level since July 2015
- View of current environment shows stark improvement
- ZEW president says German growth this year expected to remain “below average”
Frankfurt, 21 January 2020 (LS NEWS) – Investors and financial experts reported a surge in optimism about Europe’s largest economy following the latest Sino-US trade agreement and better-than-expected German growth last year, according the monthly survey by German thinktank ZEW.
The euro continued its gains against the dollar following the release of the ZEW report.
The ZEW’s forward-looking headline economic sentiment index for Germany rose sharply in January to 26.7 to handily beat the estimate of 15.0 and last month’s 10.7 result. The current conditions index grew to -9.5 to exceed the market forecast of -13.5 and December’s -19.9 reading.
ZEW economic sentiment for the Eurozone rose to 25.6 from 11.2.
“The continued strong increase of the ZEW indicator of economic sentiment is mainly due to the recent settlement of the trade dispute between the US and China,” ZEW President Achim Wambach said. “This gives rise to the hope that the trade dispute’s negative effects on the German economy will be less pronounced than previously thought.
“In addition, the German economy developed slightly better than expected in the previous year.”
German 2019 GDP growth fell to 0.6pct, its lowest level since 2013, but the performance was higher than most forecasts. A German statistics office official also said a small improvement in growth was expected for the final quarter of 2019.
German economy remains fragile
Despite this month’s unexpectedly sharp rise in the headline German index, Wambach warned that “growth is still expected to remain below average.”
VP Bank Chief Economist Thomas Gitzel said the results should be viewed with caution. “The financial market experts polled by the ZEW allow themselves to be too easily led by the good mood on stock markets.
“The GDP growth rate remains a delicate flower.”
Others, much like the ZEW poll respondents, expressed more optimism. Aila Mihr, a senior analyst at Danske Bank tweeted: “Further increases in both the expectations and current assessment indices bode well that [the] PMI and Ifo rebound will pick up some speed in Q1.”
Any pick-up in Europe’s biggest economy should help reduce demands for even looser monetary policy from dovish members of the governing council at the European Central Bank, which is scheduled to announce its latest rate decision Thursday.
--- Eric Culp, European Editor
@EricCulpLS