German Investor Confidence in Economy Unexpectedly Improves

By Carolynn Look | Bloomberg

  • Expectations index rose to -17.5; median estimate -25

  • ZEW says current conditions worsened, fourth quarter is weak

Confidence in the German economy among investors unexpectedly edged higher, suggesting they may be starting to see a way through the current gloom.

A gauge measuring expectations for the next six months increased to minus 17.5 in December. Still, the negative reading means pessimists outnumber optimists and was accompanied by a worse assessment of current conditions.

Key Insights

ZEW President Achim Wambach said the increase shouldn’t be over-interpreted in light of deteriorating current conditions. “This is indicative of relatively weak economic growth in the fourth quarter. In addition, uncertainties also remain in terms of the looming international trade dispute and Brexit, which have a particularly negative impact on private investment and Germany’s exports.”Some 17 percent of respondents said their expectations for the German economy improved, compared with 34.5 percent who saw a slide.More respondents see German, French and euro-area stock indexes rising than falling. In Italy and the U.K., the balance is negative.Investors were most pessimistic about the auto sector, followed by banksSome 62 percent of investors predict the pound will weaken against the euro over the next six months.

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Read what ECB President Mario Draghi and some of his colleagues on the Governing Council have said recently about the economy and inflation, and what it might mean for monetary policy in 2019.

— With assistance by Catarina Saraiva, Kristian Siedenburg, and Harumi Ichikura