Economic mood in Germany at its worst in eight years

Marco Green
August 14, 2019

German investor sentiment deteriorated a lot more than expected in August as worries about Sino-US trade tensions and a possible no-deal Brexit took their toll, according to the latest survey from the ZEW Center for European Economic Research in Mannheim.

German Economy Minister Peter Altmaier and Markus Soeder, Prime Minister of Bavaria, pose at a R9200 mining excavator of "Liebherr" during the official opening tour of the "Bauma" Trade Fair for Construction Machinery, Building Material Machines, Mining Machines, Construction Vehicles and Construction Equipment in Munich, Germany, April 8, 2019. In July, the index stood at -22.3 points.

The ZEW indicator of economic sentiment points to a significant deterioration in the outlook for the German economy.

And it came in massively short of forecasts from analysts surveyed by Factset, who expected a reading of -28.0 points. Over the same period, the assessment of the economic situation in Germany exacerbated significantly by 12.4 points, with the corresponding indicator dropping to a current reading of -13.5 points in August. Analysts had predicted -7.0.

"This is likely to put additional pressure on the development of German exports and industrial production".
We expect an unchanged euro area GDP growth figure from the advance estimate (0.2% q/q), but with the first release of the drivers we will assess if investments are still holding up amid the global uncertainty. The government expects the economy to grow just 0.5% this year.

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