• 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
Teachers to strike nationwide from Monday
Photo: DPA

Teachers to strike nationwide from Monday

Teachers all over the country are expected to stike starting Monday, German education trade union GEW said, after negotiations with the wage commission of the federal states (TdL) failed to achieve results. READ  

EU court deals blow to US Iraq objector's hopes
Andre Shepherd at the European Court of Justice in June 2014. Photo: DPA

EU court deals blow to US Iraq objector's hopes

American soldier Andre Shepherd, who applied for asylum in Germany as a conscientious objector against the war in Iraq after going AWOL from his unit, saw a judgement by the Court of Justice of the European Union (CJEU) go against him on Thursday. READ  

Intersex person sues clinic for unncessary op
Photo: DPA

Intersex person sues clinic for unncessary op

Intersex person Michaela Raab is suing doctors in a Nuremberg court, who she said operated on her genitals and put her through female hormone therapy without having told her she was genetically a man. READ  

Greece bailout
Greece bailout passes with massive majority
Wolfgang Schäuble addressing the Bundestag on Friday. Photo: DPA

Greece bailout passes with massive majority

UPDATE:German MPs voted 542-32 in favour of extending Greece's bailout programme on Friday. READ  

German soars into ski jump top spot
Photo: DPA

German soars into ski jump top spot

Germany is a "Weltmeister" again, this time in ski-jumping. Severin Freund's 134-metre vertical jumps, and new world distance record of nearly 136 metres, ended the nearly decade-and-a-half wait for German ski jump fans starved for gold. READ  

Muslim Council says Jewish fears 'justified'
Muslims at prayer in Frankfurt's Abubakr Mosque. Photo: DPA

Muslim Council says Jewish fears 'justified'

After the president of the Central Council of Jews warned against anti-Semitism in Muslim areas of German cities, his Muslim opposite number agreed that 'these fears are justified”. READ  

Consumer rights office slams Facebook
Photo: DPA

Consumer rights office slams Facebook

The Federation of Consumer Protection Offices (vzbv) has warned Facebook over legal breaches in its terms and conditions, saying that its claim on the homepage that “Facebook is free and always will be” is misleading. READ  

Spoof hails Varoufakis: puts 'hell' in 'Hellenica'
Yanis Varoufakis, Greece's "Minister of Awesome". Photo: DPA

Spoof hails Varoufakis: puts 'hell' in 'Hellenica'

An offering that rehabilitates the much-maligned German sense of humour is rocking the internet with a searing spoof metal tribute to Greece's formidable new finance minister Yanis Varoufakis, filled with painful moments of self-mockery. READ  

This Week in History
Kafka's Metamorphosis: 100 years of perplexity
Franz Kafka. Photo: DPA

Kafka's Metamorphosis: 100 years of perplexity

100 years ago, Franz Kafka published The Metamorphosis, now seen as one of the most significant works of 20th century German literature. The Local speaks to the academic who has reinterpreted it for a modern audience. READ  

Nurse jailed for life for serial patient murders
Niels H. in court. The five murder counts against the former nurse may just be the start. Photo: DPA

Nurse jailed for life for serial patient murders

A male nurse who injected patients with overdoses of heart medication for the thrill of resuscitating them was on Thursday sentenced to life imprisonment on five counts of murder. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
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
Sponsored Article
Tourist or lifer: what sort of expat are you?
National
How Dresden bombing still divides Germany, 70 years on
Sponsored Article
Are you an American expat? How to face FATCA
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

3,430
jobs available
Toytown Germany
Germany's English-speaking crowd