• 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

Investor sentiment in Germany has soared to the highest levels since the start of the eurozone debt crisis in 2010 as the outlook for Europe's top economy continues to brighten, a survey found on Tuesday.

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
Ecclestone lawyers: Bribes never happened
Bernie Ecclestone with his lawyers in a Munich court on Thursday morning. Photo: DPA

Ecclestone lawyers: Bribes never happened

UPDATE: Formula One supremo Bernie Ecclestone went on trial in Munich on Thursday facing bribery charges which his lawyers called “improper, misleading and inconsistent.” READ () »

Minister praises Erasmus 'success story'
Photo: DPA

Minister praises Erasmus 'success story'

A revamped version of European student exchange programme Erasmus officially launched in Berlin on Thursday with Germany's education minister praising the scheme as a Europe-wide “success story”. READ () »

Turkey tourists lose call to prayer refund bid
Photo: DPA

Turkey tourists lose call to prayer refund bid

A German couple has lost their legal fight to get a refund for a Turkish holiday which they said was ruined by the calls to prayer from a nearby mosque. It is just one of a series of court claims by picky German tourists. READ () »

Germany halts arms sales to Russia
Russian troops surround a Ukrainian base in Crimea. Photo: DPA

Germany halts arms sales to Russia

Germany has stopped selling arms to Russia due to the current “political situation”, according to reports on Thursday. The sale of military equipment to Russia by German firms has been criticized by the country’s Nato allies. READ () »

Truck kills man lying in middle of road
Photo: DPA

Truck kills man lying in middle of road

Police were searching for witnesses on Wednesday morning following a mysterious road accident in which a 25-year-old man was killed as he lay in the middle of the road. READ () »

Where are Germany's smartest towns?
Germany's cleverest town. Photo: DPA

Where are Germany's smartest towns?

A brain training website released scores on Wednesday showing which German towns performed best and worst in a range of cognitive tests - with some surprising results. READ () »

April wraps up with stormy week ahead
Lightning over Lake Starnberg, in Bavaria. Photo: DPA

April wraps up with stormy week ahead

The end of April is looking stormy for Germany with hot and cold air mixing and making for wild spring weather over the coming few days, state forecasters DWD said on Wednesday. READ () »

Germany sold €40 million of arms to Russia
Russian troops pictured in March in Crimea. Photo: DPA

Germany sold €40 million of arms to Russia

Germany arms sales to Russia have come under fire following the crisis in Ukraine. In 2012 Germany sold €40 million worth of rifles, pistols and armoured vehicles to the country. READ () »

Munich to get 'Tetris cube' hotel
Photo: Nieto Sobejano Architects, Berlin

Munich to get 'Tetris cube' hotel

Munich's old city centre is to receive an ultra modern addition to its skyline in the shape of a new hotel dubbed 'the Tetris cube'. READ () »

The Local List
German beer culture in 11 gulps
Photo: DPA

German beer culture in 11 gulps

Wednesday marks the 498th anniversary of Germany's celebrated beer purity law, so in honour of nearly half a millennium of hoppy history, this week's Local List tells some beer truths you may not know. READ () »

RECEIVE OUR NEWSLETTER AND ALERTS
Gallery
11 things you need to know about German beer
Photo: DPA
Politics
Interview with AfD - 'If Britain goes, Europe is lost'
Photo: DPA
National
Police damage own water cannon with eggs
Photo: DPA
National
Let us start work later after World Cup nights, unions says
Photo: DPA
Society
Crystal meth use hits record level
Photo: DPA
Rhineland
Elderly man taped €200,000 to his genitals
Photo: DPA
Business & Money
What's the unemployment rate in your area of Germany?
Photo: DPA
Gallery
Nine ways to celebrate Easter like a German
Photo: Galerie Bilderwelt
Gallery
World War I in colour photos
Photo: DPA
Society
JobTalk: Why you should teach English in Germany
Photo: DPA
National
330,000 sign up against TV licence fee
Photo: DPA
Hamburg
School kids hospitalized after 'porno' party
Advertisement:
Photo: Submitted
Frankfurt
'I'll get even with my old pal Schwarzenegger'
Photo: DPA
Gallery
Ten great inventions you (probably) didn't know were German
Photo: J. Arthur White
Berlin
Clashes in Berlin as refugees tear down their own camp
Photo: DPA
Gallery
Munich's baby polar bears are finally named
Photo: DPA
Gallery
The 10 best German employers to work for
CurrencyFair
Sponsored Article
Why it pays to avoid banks when making overseas transfers
Mr. Lodge
Sponsored Article
How to find a furnished rental in Munich
Sponsored Article
How to make a lasting impression in business
Hult International Business School
Sponsored Article
What they don't teach you at Business School
Photo: DPA
Society
Nine jobs you can only do in Germany
Photo: DPA
Business & Money
JobTalk: All you need to know about working in Germany
Photo: DPA
Features
The Local List Archive - Your guide to all things German
National
Share news tips with The Local Germany
Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

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

3,069
jobs available
Toytown Germany
Germany's English-speaking crowd