• Germany's news in English
 

Investor sentiment rises to three-year high

Published: 19 Feb 2013 13:31 GMT+01:00

The widely watched investor confidence index calculated by the ZEW economic institute soared to 48.2 points in February from 31.5 points in January. It is the third consecutive monthly rise and brings the index to its highest level since April 2010.

Analysts had been expecting a much more modest increase to just 35 points this month. "As the latest gross domestic product (GDP) data show, the German economy cooled noticeably at the end of last year.

But the rise in investors' economic expectations in February suggests that financial market experts are projecting an improvement in the coming months," said ZEW President Wolfgang Franz.

"Experts have ticked off the weak fourth quarter of 2012. In their view, the headwinds for the German economy coming from the eurozone crisis are not as strong as they were a few months ago. If this remains the case in the coming months, the German economy will gain modest momentum again," Franz said.

After GDP growth in Germany slowed throughout 2012, the economy actually contracted by 0.6 percent in the last three months as weak demand in other eurozone countries hurt exports.

Nevertheless, the government, the Bundesbank and other economic experts are convinced that the dip in growth will prove only short-lived and the economy will start growing again in the first quarter of 2013.

That means Germany will have avoided the recession that has entrenched most of its eurozone partners and the single currency area as a whole.

For the survey, ZEW questioned analysts and institutional investors about their current assessment of the economic situation in Germany, as well as their expectations for the coming months.

The sub-index measuring financial market players' view of the current economic situation in Germany slipped by 1.9 points to 5.2 points in February, its lowest level since June 2010.

A frequent criticism against the ZEW index is that it can be volatile and is therefore not particularly reliable. Analysts nevertheless took cheer from the numbers, even if they said they would wait to see whether other sentiment indicators and even hard economic data backed up investor optimism.

The key Ifo business climate index is scheduled to be published later this week. "All in all, financial investors are increasingly bullish about the outlook for Germany's economy and seem to expect a recovery with accelerating pace ahead," said Barclays Research analyst Thomas Harjes.

Commerzbank economist Ralph Solveen agreed. "A growing percentage of analysts obviously assumes that the German economy has managed to turn around and that an upturn is imminent," he said.

"However, indications as to whether or not they are right will only be provided by the purchasing managers' indices and Ifo business climate, due out on Thursday and Friday, respectively. But these indices are also expected to continue rising."

Natixis economist Johannes Gareis said the two main reasons for the increase in the ZEW index were the easing of the eurozone crisis and the low level of interest rates. "However, the economic situation of Germany's trade partners is for the most part still quite weak, as the fourth-quarter GDP data indicated, and this led to the decrease in the current situation sub-component.

"Despite the upbeat reading, we remain cautious with regards to Germany's prospects, as there are many challenges to overcome in 2013. Nonetheless, we still expect positive growth out of Germany, albeit at a slower pace than 2012," Gareis said.

Berenberg Bank economist Christian Schulz said said the PMIs and the Ifo index due out at the end of this week will be more important in assessing the extent of the upswing. "We expect further improvements there after the strong gains in recent months," he said.

Capital Economics economist Jennifer McKeown argued that the improvement was partly due to hints of further action on the part of the European Central Bank. But with the ECB's words "yet to be followed up with actions and political risks in Italy growing, we fear that investor sentiment might weaken again before long," she warned.

AFP/mb

The Local (news@thelocal.de)

Your comments about this article

15:57 February 19, 2013 by Steve1949
Blah, Blah, Blah.
18:23 February 19, 2013 by smart2012
And car sector just announced the worst January in sales since 1990 (-9%)

And Siemens just announced 7000 people cut in Germany..

agree with Steve 1949.. Just bla bla bla to help Merkel propaganda
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