German ZEW Falls Outlining Weak Confidence in Economy

Investor sentiment in Germany fell for the ninth month in a row as conflict in Ukraine and weak economic growth in the eurozone continue to undermine confidence, a survey has suggested.

The ZEW economic sentiment index fell 1.7 points to 6.9 in September, well below its long-term average of 24.6.

The fall was less than in August and less than analysts had expected.

The survey raises questions about the strength of the German economic recovery, commentators said.

ZEW president Prof. Clemens Fuest said that although the downward trend had slowed significantly, “the economic climate is still characterised by great uncertainty.

“The risk of sanction spiral with Russia continues to exist and economic activity in the eurozone remains disappointing.”

Prof. Fuest added that it was “difficult to assess potential consequences of Scottish independence.”

Germany’s economy, the biggest in the eurozone, shrank by 0.2% between April and June this year.

Analysts said the survey suggested investors were not expecting a dramatic rebound in the current quarter.

The ZEW survey “just sent more signs of caution, showing that at least financial market participants are quickly losing confidence in the German growth story”, said Carsten Brzeski at ING.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza