• Germany edition
 
Investor confidence highest in years
Photo: DPA

Investor confidence highest in years

Published: 22 Jan 2013 12:07 GMT+01:00
Updated: 22 Jan 2013 12:07 GMT+01:00

The widely watched investor confidence index calculated by the ZEW economic institute soared to 31.5 points in January from 6.9 points in December, its highest level since May 2010, when Greece had to be bailed out and the sovereign debt crisis began to unfold.

The indicator already re-entered positive territory for the first time in more than six months last month, and analysts had been projecting a modest rise again to around 12.0 points this month.

"The renewed rise in economic expectations shows that financial market experts believe the economic outlook for Germany to have improved for the next six months," said ZEW president Wolfgang Franz.

Reduced market uncertainty with regard to the future of the eurozone had contributed to this, Franz said.

He suggested that improved sentiment will persuade companies to proceed with investment projects that they had long put on hold.

"Nevertheless, the economic starting point for many of Germany's key trading partners remains weak. This means the German economy will grow only moderately in 2013," Franz cautioned.

While analysts cheered the ZEW's strong reading this month, they warned it was too early to crack open the champagne just yet.

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 the sub-index measuring financial market players' view of the current economic situation in Germany edged up by only 1.4 points to 7.1 points.

"While the rise in sentiment is encouraging, it is too soon to conclude that the worst is over for Germany," said Capital Economics analyst Jennifer McKeown.

"Despite rising lately, the more reliable German business surveys still look much more pessimistic - some are consistent with a continued recession in Germany. And less timely hard data on trade and industrial production are still weakening rather than strengthening," she said.

A frequent criticism against the ZEW index is that it can be volatile and is therefore not particularly trustworthy.

Natixis economist Constantin Wirschke said he, too, was "remaining cautious with regards to Germany's prospects in 2013.

"While we believe Germany will still grow in 2013, growth should be slower than in 2012," he said.

The German economy expanded by only 0.7 percent last year, its weakest growth in four years. And the government has halved its forecast for 2013 to just 0.4 percent.

Annalisa Piazza at Newedge Strategy acknowledged that while the debt crisis "is far from being over, today's survey confirms that analysts and fund managers have now more faith in policymakers' response to the solution of the crisis."

The sub-index measuring investors' assessment of the current situation "remains well below the levels seen in 2011 as the German economy is still set to contract in the fourth quarter of 2012" and show no improvement early in 2013, she said.

Nevertheless, all in all, she viewed the ZEW survey as "a very encouraging report that paves the way for a modest reacceleration in the German economy in the first half of 2013," Piazza concluded.

Berenberg Bank economist Christian Schulz said "investors seem increasingly confident" that the safety net put in place by the European Central Bank "has averted the risk of a catastrophic eurozone break-up for good."

The ECB has undertaken a series of emergency measures, such as pumping vast amounts of liquidity into the markets and pledging to buy up the sovereign bonds of the countries hit hardest by the crisis.

"Serious risks remain, but the ECB can take comfort," Schulz said. "Its commitment to unlimited bond purchases is increasingly passing through to the real economy," he said.

AFP/jlb

The Local (news@thelocal.de)

Don't miss...X
Left Right

Your comments about this article

14:22 January 22, 2013 by smart2012
thanks Mario Draghi, even if "The sub-index measuring investors' assessment of the current situation "remains well below the levels seen in 2011 as the German economy is still set to contract in the fourth quarter of 2012" and show no improvement early in 2013" is not promising
Today's headlines
Man shot in tax office dispute
DPA

Man shot in tax office dispute

A tax office worker in the Schleswig-Holstein town of Rendsburg died in hospital after being shot on Monday morning. READ  

Merkel details Iraq arms shipment to MPs
Angela Merkel addressing the Bundestag on Monday as her ministers look on. Photo: DPA

Merkel details Iraq arms shipment to MPs

UPDATE: Chancellor Angela Merkel addressed the Bundestag on Monday to explain her government's decision to send weapons to Iraqi Kurds fighting terrorist group Isis. READ  

Olympic visions compete in Berlin and Hamburg
Berlin and Hamburg mayors Klaus Wowereit and Olaf Scholz on Monday. Photos: DPA

Olympic visions compete in Berlin and Hamburg

Germany's capital and its gateway to the North Sea each released details of their Olympic bids on Monday as the race for the 2024 or 2028 summer games nominations picks up momentum. READ  

Vacationer killed by Baltic Sea bacteria
Photo: DPA

Vacationer killed by Baltic Sea bacteria

Six people were infected with a bacteria from the Caribbean which has made itself at home in the popular German vacation destination. One of them is now in a coma. READ  

UN applauds Germany's help to refugees
DPA

UN applauds Germany's help to refugees

UNHCR Commissioner Antonio Guterres is lauding Germany's role in accommodating the influx of refugees in Europe, while pointing at the imbalance of effort within the EU. The federal government has pledged to do more. READ  

Energy-sucking vacuums no longer welcome
Photo: DPA

Energy-sucking vacuums no longer welcome

Starting on Monday, vacuum cleaners drawing more than 1600 watts can no longer be brought into Germany. The ban is part of a an EU-wide environmental protection measure. READ  

Coalition horsetrading starts after Saxony vote
CDU leader Stanislav Tillich with SPD Martig Dulig. Photo: DPA

Coalition horsetrading starts after Saxony vote

Chancellor Angela Merkel's Christian Democratic (CDU) party is in search of a new partner after the expulsion of its former allies the Free Democrats (FDP) from the Saxon state parliament. READ  

Presented by Phorms Education
Bilingual education from nursery to graduation
Photo: Phorms Education

Bilingual education from nursery to graduation

A network of German based schools is changing how students learn languages by introducing English and Deutsch from day one, with the method yielding impressive academic results. The Local finds out more about Phorms Education. READ  

JobTalk Germany
'German bosses need to praise more'
More of this? Photo: Shutterstock

'German bosses need to praise more'

What do German bosses need to do to get more out of their staff? Frankfurt-based business consultant Justin Bariso has this advice. READ  

Train drivers take their turn to strike
A banner announcing a previous rail strike in June is displayed in a station. Photo: DPA

Train drivers take their turn to strike

A train drivers' union has warned of a nationwide strike to take place on Monday evening as it seeks leverage in negotiations with Deutsche Bahn. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Sponsored Article
Bilingual education from nursery to graduation at Phorms
Photo: Shutterstock
Gallery
Ten of the oddest things found by German border control
Photo: Gerkan, Marg and Partners/Tegel Projekt GmbH/J. Mayer
Berlin
How will Berlin look in five years' time?
Photo: DPA
Culture
Sprechen Sie Deutsch? 10 reasons why you should
Photo: DPA
Gallery
The best of Berlin's mayor Klaus Wowereit in 14 pictures
Photo: DPA
Politics
Germany sends burgers and sausages to Kurds
Photo: Matthias Kock
National
Tribes, ties and a movie: A German's Afghan life
Photo: DPA
Gallery
10 things to do before summer in Germany is really over
Photo: DPA
Gallery
The mysteries of Berlin's abandoned theme park
Photo: Europeana.de 1914 - 1918
Gallery
A German soldier's life behind WWI lines
Photo: DPA
Business & Money
JobTalk: All you need to know about working in Germany
National
Share news tips with The Local Germany
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

3,418
jobs available
Toytown Germany
Germany's English-speaking crowd