Index of investor and analyst expectations with respect to the German economy (Economic Sentiment) calculated by ZEW institute fell this month by 16% - from 55.7 points in February to 46.6 points, according to the organization.In February, the index lost nearly 10% and now its value is less than a quarter of the record 62 points, set in last December.
Index of investor and analyst relations to the current situation in the German economy in the current month increased from 50 points to 51.3, refreshing highs of August 2011.
Analysts polled by Bloomberg, predicted change in both indicators to 52 points precisely.
Reduced confidence in the German economy for the third month in a row indicates heightened fears that the weak recovery in the Eurozone creates risks for Germany. Also, the so-called “oriental factor” played its role - the crisis in Ukraine and complication of relations with Russia.
"Investor’s confidence was at a record high and perhaps it passed the peak of the cycle. At the German economy may be difficulties with another acceleration of growth at this stage, especially if external demand will continue to decline. Concerns about the situation in China and Ukraine could affect the mood." said Credit Agricole CIB economist Frederic Dyukroze.
Growth of the German economy by 0.4% in the IV quarter exceeded the expectations of experts, however, tensions with Russia, weakening growth in China and slowing recovery in the Eurozone threaten Germany with new pause in country’s growth.
What is ZEW?
ZEW is a monthly economic survey. The ZEW Economic Sentiment is an almalgamation of the sentiments of approximately 350 economists and analysts regarding the economic future of Germany for the next six months. The survey shows the balance between those analysts who are optimistic about Germany's economic future and those who are not.
The ZEW Economic Sentiment covers the economic futures of several other countries as well. This survey includes analyst opinions for Europe, the UK, Japan and the U.S. The index value greater than zero indicates optimism, while a value below zero indicates pessimism.