• 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)

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
'Germany can handle more refugees'
Refugees in emergency accommodation in Baden-Württemberg. Photo: DPA

'Germany can handle more refugees'

Germany is the most popular destination in the EU for those fleeing the brutal onslaught in Syria. The country’s interior minister wants other European countries to take in more refugees, but some groups think Germany should do more. READ  

Hostage horror in Yemen, hostage hope in Somalia
Johannes Hentschel, Sabine and their son died in Yemen. Michael Scott Moore (r) was released on Tuesday. Photo: DPA

Hostage horror in Yemen, hostage hope in Somalia

UPDATE: American-German journalist Michael Scott Moore was released on Tuesday from more than two-and-a-half years in the captivity of pirates in Somalia. His release came the day a German family was confirmed dead, five years after being captured in Yemen. READ  

Iraq denies entry to German military trainers
The seven trainers boarded their plane in Germany on Friday. Photo: DPA

Iraq denies entry to German military trainers

UPDATE: Seven German military trainers, who flew to Iraq on Friday to train Kurdish fighters battling Islamic extremists Isis, have been denied permission to enter the country. READ  

One in 10 voters support anti-euro AfD
AfD leader Bernd Lucke celebrates with supporters during the Brandenburg state election. Photo: DPA

One in 10 voters support anti-euro AfD

Eurosceptic party Alternative für Deutschland (AfD) is supported by 10 percent of voters in Germany, a poll on Tuesday showed. It is the first time the fast-rising anti-euro party has polled nationwide in double digits. READ  

Analysis
Why Germany fears US digital disruptors
Angela Merkel with her official Blackberry phone

Why Germany fears US digital disruptors

Every week brings a new headline pitting German politicians, businesses or unions against a US digital company. What is the country's problem with US tech businesses? READ  

Quiz
Can you pass the German citizenship test?
Photo: DPA

Can you pass the German citizenship test?

Since 2008 anyone applying for German citizenship has had to take a test on their new country's history, politics and values. Do you know enough about Germany to pass it? READ  

Rent caps are coming in 2015
Photo: DPA

Rent caps are coming in 2015

A move to cap rent rises in German cities has been agreed by coalition parties, Germany's justice minister announced on Tuesday morning. READ  

Boy, 6, among Berlin train attack victims
Photo: DPA

Boy, 6, among Berlin train attack victims

Two vicious acts of violence on Berlin trains over the weekend have shocked passengers, with the youngest attack victim aged just six. READ  

Gerst and crew get 3D printer and some mice
Gerst is waiting the arrival of the SpaceX Dragon which launched on Sunday. Photo: NASA TV/DPA

Gerst and crew get 3D printer and some mice

UPDATE: Alexander Gerst, Germany's man aboard the International Space Station (ISS), captured SpaceX's unmanned Dragon craft with a cargo of supplies on Tuesday. READ  

Father, 75, tries to dynamite son
Police searching the area after the TNT discovery in Nußdorf. Photo: DPA

Father, 75, tries to dynamite son

A Bavarian pensioner is being investigated on suspicion of attempted murder after planting 3.5kg of TNT in his son's garden, next door to his own home, police said on Monday. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Photo: DPA
Business & Money
How to become an au pair in Germany
Photo: DPA
Munich
Fights and a skinny dip kick off Oktoberfest
Photo: DPA
Sport
German Fifa exec: 'Qatar won't host World Cup'
DPA
Gallery
The best photos from Oktoberfest's opening weekend
Photo: DPA
Munich
Your guide to Munich Oktoberfest's food
Marks & Spencer
Sponsored Article
Marks and Spencer: Win €300 toward your new autumn wardrobe
Photo: Shutterstock
Gallery
Ten German words you'll never want to hear again
Photo: Shutterstock
Business & Money
The three types of firms hiring foreigners
Sponsored Article
Bilingual education from nursery to graduation at Phorms
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

3,343
jobs available
Toytown Germany
Germany's English-speaking crowd