• Germany's news in English
 

Investor confidence highest in years

Published: 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
Strong economy shrinks debt as share of GDP
Workers in a Volkswagen factory in Wolfsburg. Photo: DPA

Strong economy shrinks debt as share of GDP

Germany's total debt increased slightly in 2014, but because the economy grew, its proportion of overall output fell, the Bundesbank (central bank) said on Wednesday. READ  

Seven lives claimed by Storm Niklas
Photo: DPA

Seven lives claimed by Storm Niklas

Germany woke up on Wednesday morning to the chaos which hurricane-strength winds brought to the country for much of Tuesday, killing seven people and causing major damage to travel infrastructure. READ  

Kaiser to rule again from Berlin
The Berliner Stadtschloss (city palace) in 1904. Photo: Wikimedia Commons

Kaiser to rule again from Berlin

In a shock decision, the German government announced on Wednesday that it had asked civil servants to re-draft the constitution to restore the monarchy. READ  

Post, Amazon face Easter strikes
Photo: DPA

Post, Amazon face Easter strikes

The trade union Verdi has announced strikes for Wednesday at the Deutsche Post (German Post) and Amazon, meaning that Easter cards and packages might not arrive on time. READ  

Arsonists hit pro-refugee art project
The burnt ruins of the art project. Photo: DPA

Arsonists hit pro-refugee art project

An art installation dedicated to refugees was burnt down in Berlin early on Tuesday, with police suspecting it to be an arson attack. READ  

Hurricane Niklas
Storm Niklas kills at least three, stops trains
This train in Lower Saxony had to stop after striking a fallen tree. Photo: DPA

Storm Niklas kills at least three, stops trains

Hurricane “Niklas” has reportedly claimed three victims, while trains have been cancelled across Germany as the storm rages. READ  

Stuttgart worst city for traffic jams
Photo: DPA

Stuttgart worst city for traffic jams

GPS company TomTom released data on Tuesday showing which cities have the worst traffic problems. The conclusion: Stuttgart is Germany's worst city for commuters. READ  

Alps Plane Crash
Lufthansa cancels 60th jubilee celebration
Photo: DPA

Lufthansa cancels 60th jubilee celebration

Germany's national airline Lufthansa announced on Tuesday that it would cancel celebrations for the 60th anniversary of its founding in 1955. READ  

Alps Plane Crash
Doctors warn against snap crash reaction

Doctors warn against snap crash reaction

The president of Germany's Council of Psychotherapists said on Tuesday that there was no reason why the country should loosen its rules on doctor-patient confidentiality in the wake of the Germanwings crash. READ  

Merkel urges Germans: Give Greece a chance
Chancellor Merkel speaking in Helsinki. Photo: DPA

Merkel urges Germans: Give Greece a chance

On a visit to Helsinki on Monday, Chancellor Angela Merkel showed a patient side to the German government as the Eurozone continues to wait for a new list of economic reforms from Greece. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Shutterstock
Sponsored Article
10 things you didn’t know about Zagreb (and why you should go)
Can the 'nightmare' of a pilot downing a plane be prevented?
National
LIVE: Co-pilot suspected of crashing plane
Sponsored Article
What expat parents should ask before choosing a school
Pupils mourn lost classmates
National
Freed after 25 years on death row
National
Cologne Cathedral returns from space
Features
Paddy's Day, Berlin style
Is your workload 'out of control'? You're not alone...
National
Why east Germans are happy to get it on on camera
National
What would you do with a 250-year-old pretzel?
Features
Just why is the German flag Schwarz, Rot, Gold?
Business & Money
Getting German workers and bosses thinking positive
National
Uplifting thoughts to get you through the last week of winter
National
Who wants the Olympics more - Hamburg or Berlin?
National
Last-minute drama of Germany's Eurovision 2015 entry
National
German photographer takes world's top prize
Features
Meet the woman getting Germans to drink more – and better – beer
Gallery
Get inspired for International Women's Day with German heroes
Sponsored Article
Expert US tax preparation for Americans in Germany
Green party proposes first-ever cannabis legalization plan
Gallery
In pictures: Germany's seven most livable cities
National
Singapore canes Germans for train graffiti
Politics
Surprise! Germans love feeling like they run the EU
Politics
Anger over plan to show women what men earn
Travel
Munich tram fans bicker over new bell
Features
Kafka: puzzling translators 100 years on
Business & Money
France or Germany: Which country really is the best country to work in?
Photo: Police
Rhineland
Student driver crashes tank into family garden.
Photo: DPA
Politics
There was a notable absence at the Anti-Semitism Commission
National
How Dresden bombing still divides Germany, 70 years on
Photo: DPA
Gallery
Take a cute break with this gallery of baby animals
International
What's keeping UK expats from voting?
Photo: DPA
National
Terror alert at a new high. Should you be worried?
Gallery
The best regional foods TTIP opponents want to protect
Photo: DPA
Features
All you ever needed to know about Pegida
Photo: Shutterstock
Culture
This cosplayer did not think his plan through
National
Europe in statistics - from Spain to Sweden
Gallery
Top 12 German idioms
Culture
10 top tips for partying in Germany
Photo: DPA
Technology
What does the Chancellor see as the future of the internet?
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

6,999
jobs available
Toytown Germany
Germany's English-speaking crowd