• Germany edition
 
Investor sentiment rises to three-year high
Photo: DPA

Investor sentiment rises to three-year high

Published: 19 Feb 2013 13:31 GMT+01:00
Updated: 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
Four arrested in raids against Isis
Photo: DPA

Four arrested in raids against Isis

Police raided 15 homes across Germany over the weekend and arrested four suspected supporters of the Islamic State (Isis). They are alleged to have smuggled a teenager and thousands of winter military clothes to the terrorist group's frontlines. READ  

Munich Refugee Crisis
'There's no room but we have nowhere else to go'
Hassan, pictured outside the Bayernkaserne with two of his children, arrived in Munich from Syria. Photo: Mariane Schroeder

'There's no room but we have nowhere else to go'

Around 300 refugees are arriving in Munich each day, but accommodation centres are full. With authorities struggling for answers, The Local meets those at the sharp end of the crisis. READ  

Train Strike
Buses up prices, football fans brawl, trains return
Photo: DPA

Buses up prices, football fans brawl, trains return

UPDATE: Deutsche Bahn trains are chugging along again after a 50-hour train strike cost the service "tens of millions" and brought travel headaches across the country, leaving millions of passengers struggling for transportation over the weekend as well as at least one mass brawl in its tracks. READ  

Foreigner toll to hit motorways only
Transport Minister Alexander Dobrindt. Photo: DPA

Foreigner toll to hit motorways only

Transport Minister Alexander Dobrindt plans to limit his road toll for foreigners initially to motorways only, Spiegel reported on Sunday. READ  

Criminals blow Berlin Sparkasse wide open
The damaged bank branch. Photo: DPA

Criminals blow Berlin Sparkasse wide open

Criminals robbed a Berliner Sparkasse bank branch early on Sunday morning - using a bomb. READ  

French retread path to Berlin finance ministry
French Economy and Finance Ministers Emmanuel Macron (l) and Michel Sapin. Photo: DPA

French retread path to Berlin finance ministry

French and German ministers are due to meet on Monday to discuss ways of boosting growth in Europe's two biggest economies, as Paris called on Berlin to step up investment. READ  

Lufthansa pilots to strike for 35 hours
Grounded. Photo: DPA

Lufthansa pilots to strike for 35 hours

UPDATE: Pilots' union Cockpit has called a new 35-hour walkout at Lufthansa starting Monday, hours after a weekend-long rail strike finished. READ  

German dies after trying to take ravine photos
Photo: File photo/Shutterstock

German dies after trying to take ravine photos

A German student has died after falling into a steep ravine at a waterfall on a popular Malaysian resort island, police said on Sunday. READ  

Academic makes Twitter splash saying 'Nein'
File photo. DPA

Academic makes Twitter splash saying 'Nein'

Former Ivy League professor of German Eric Jarosinski has become a Twitter phenomenon developing a huge social media following thanks in no small part to saying no in German. READ  

Klopp slams Dortmund as slump continues
Jurgen Klopp looks downcast as Borussia Dortmund suffer another defeat. Photo: DPA

Klopp slams Dortmund as slump continues

Jurgen Klopp slammed his Borussia Dortmund side after Saturday's 2-1 defeat at Cologne made it five Bundesliga games without a win ahead of Wednesday's Champions League clash at Galatasaray. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Photo: DPA
Culture
Can you top our history quiz leaderboard?
Photo: Facebook
Society
German motorcycle gang joins Isis fight
Photo: DPA
Politics
UKIP ‘seeks EU pact’ with German satirical party
Photo: DPA
Travel
This is the man who has stopped Germany's trains
Photo: Shutterstock
Business & Money
Expats: Should I stay or should I go?
Photo: DPA
Gallery
PHOTOS: World's biggest erotic fair opens in Berlin
Photo: DPA/Shutterstock
Gallery
11 things Germans are afraid of...
Photo: Shutterstock
Business & Money
Which expat foods do you miss the most?
Sponsored Article
International School on the Rhine: a legacy
Photo: Shutterstock
Business & Money
How to get hired at a Berlin startup
Photo: DPA
Gallery
The ten richest people in Germany
Photo: DPA
Business & Money
JobTalk: All you need to know about working in Germany
National
Share news tips with The Local Germany
Sponsored Article
Bilingual education from nursery to graduation at Phorms
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

3,436
jobs available
Toytown Germany
Germany's English-speaking crowd