Investor confidence for Germany rose at a slower pace after three months of more substantial gains, as investors grew slightly more cautious for the outlook of the eurozone sovereign debt crisis amid inconclusive Italian elections and bailout negotiations for Cyprus, according to the ZEW Centre for European Economic Research.
The ZEW indicator of economic sentiment for Germany increased by 0.3 points in March to 48.5 points, the highest level in three years, according to researchers. The increase slowed sharply from a rise of 16.7 points in February, 24.6 points in January and 22.6 points in December, bringing the index out of the negative numbers seen before November.
`The political situation in Italy and the rescue package for Cyprus have increased the risk that the eurozone debt crisis will worsen again,’ ZEW says in a press statement. `This may have contributed to the fact that the indicator has not increased substantially this month.’
The March ZEW indicator, which measures investors’ outlook for Germany over the next six months, was based on a survey of 245 analysts taken between March 4 and March 18. The earlier dates of the survey preceded the controversy that overtook Cyprus on March 16 with the news that the country would charge a levy on bank deposits as a condition of an international bailout package. The survey followed, though, the late February Italian elections that proved inconclusive and left its parliament gridlocked.
The indicator for confidence in Germany’s current economic situation in March rose 8.4 points to 13.6, according to ZEW. Germany was the only country in Europe measured by the survey to post a positive current economic assessment.
`The financial market experts stick to their forecast: the economic situation in Germany is likely to improve over the next months,’ says ZEW president Clemens Fuest in the March release. `As before, the eurozone debt crisis remains the biggest risk. This fact has been brought back to our attention over the last weeks.’
The six-month economic outlook for the eurozone dropped 9.0 points to 33.4, led by the outlook for Italy, which plunged back into negative territory, falling 18.8 points to minus 0.5. The outlook for France declined 9.3 points to 4.2 and the UK’s outlook fell 3.5 points to 16.7. The outlook for the US declined 0.3 points to 45.9.
The survey’s assessment of the eurozone’s current economic situation fell 0.5 points to minus 76.1 as Italy dropped 3.0 points to minus 92.3 and France declined by 2.5 points to minus 80.7. The UK dropped 1.0 points to minus 73.1 while the US gained 3.1 to minus 6.3, nearing positive territory.
