• 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
Bundesbank warns of ECB 'change of course'
Bundesbank chief Jens Weidmann: Photo: DPA

Bundesbank warns of ECB 'change of course'

The head of Germany's powerful Bundesbank sharply criticised what he called a radical new approach by the European Central Bank of easy money, in an interview published Sunday. READ  

MH17 Crash
Families of German MH17 victims to sue
Australian and Dutch investigators examine a piece of debris of Malaysia Airlines Flight MH17 plane. Photo: EPA/DPA/ Igor Kovalenko

Families of German MH17 victims to sue

Relatives of German victims of downed Malaysia Airlines flight MH17 plan to sue Ukraine and its president for criminal negligence for not closing the country's airspace, a lawyer said Sunday. READ  

Sport
Wonder goal puts new boys Paderborn on top
Paderborn players celebrate after defeating Hanover 2-0 to go top of the Bundesliga. Photo: DPA

Wonder goal puts new boys Paderborn on top

Promoted Paderborn went top of the Bundesliga helped by an extraordinary 80-metre goal at Hanover on Saturday as champions Bayern Munich were held to a goalless draw by struggling Hamburg. READ  

Oktoberfest 2014
Oktoberfest opens to toast millions
Celebrities Carolin Reiber and Marianne Sägebrecht raise their glasses at Oktoberfest 2014. Photo: DPA

Oktoberfest opens to toast millions

Germany's world-famous Oktoberfest kicked off Saturday with the traditional tapping of the first barrel of beer, as millions of revellers are set to soak up the frothy atmosphere in the 16-day annual extravaganza. READ  

Germany plan air lifts to help fight Ebola
A Liberian man holds his daughter as they wait for treatment for suspected Ebola symptoms in Monrovia. Photo: DPA

Germany plan air lifts to help fight Ebola

Germany and France will send military transport planes to West Africa to help efforts to contain the Ebola epidemic, Chancellor Angela Merkel and military officials said on Friday. READ  

Germany beefs up asylum rules for Balkans

Germany beefs up asylum rules for Balkans

Germany made it harder Friday for people from Bosnia-Herzegovina, Macedonia and Serbia to apply for asylum after lawmakers classified the three Balkan countries as safe, with respect for basic rights. READ  

German Muslims rally against extremism
Muslims pray in Kreuzberg, Berlin, on Friday outside a mosque which was damaged in an arson attack. Photo: DPA

German Muslims rally against extremism

Muslims across Germany held a day of prayers and rallies on Friday to condemn both Islamic extremism and a backlash against their faith that has seen arson attacks on mosques. READ  

German military flight to Iraq starts with a hiccup
The trainers on the air strip in Hohn, Schleswig-Holstein. Photo: Bundeswehr.

German military flight to Iraq starts with a hiccup

Military trainers flew to northern Iraq from Germany on Friday, ahead of a huge delivery of weapons from the German military, but things didn’t initially go as planned. READ  

Munich gets four Euro 2020 matches
Photo: DPA

Munich gets four Euro 2020 matches

UPDATE: Munich will play host to four Euro 2020 games, European football’s governing body Uefa announced in Geneva on Friday, but London was the real winner. READ  

Driver, 18, ploughs into school pupils
The scene by the bus stop outside the school in Diepholz. Photo: DPA

Driver, 18, ploughs into school pupils

An 18-year-old drove into a group of students outside a school in western Germany on Friday morning, injuring several. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Photo: DPA
Culture
Your guide to Munich Oktoberfest's tents
Photo: DPA
Hamburg
Drunk teachers ruin school trip to Hamburg
Marks & Spencer
Sponsored Article
Fashion Ladies of the Local: Win a New Autumn Look
Photo: DPA
Gallery
Oktoberfest 2014: The best and worst in dirndl fashion
Photo: Shutterstock
Gallery
Ten German words you'll never want to hear again
Photo: DPA
Education
German universities tumble in global rankings
Photo: Shutterstock
Business & Money
The three types of firms hiring foreigners
Photo: DPA
Berlin
Frisky couple shock Berlin commuters
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

3,315
jobs available
Toytown Germany
Germany's English-speaking crowd