Investor confidence for Germany fell slightly in July, but remains in positive territory and is hovering just above the historical average at the start of the third quarter, as the US economy shows signs of growth and fears of eurozone collapse fade, according to the ZEW Centre for European Economic Research.
The ZEW indicator for economic sentiment in Germany – Europe’s largest economy and a driver of continental growth – fell by 2.2 points in July to 36.3 points, after gaining 2.1 points in June, ZEW says. Although they represent a drop in economic sentiment, the figures remain in positive territory. The economic outlook for the eurozone as a whole over the next six months has increased by 2.2 points to 32.8.
‘The financial market experts stick to their overall positive forecast,’ says Clemens Fuest, president of ZEW, in a press release. ‘This illustrates their confidence in the robustness of the German economy despite the rather weak figures concerning industrial production and foreign trade released recently.’
While investor confidence has fallen, it remains buoyed in positive territory by indications of growth in the US economy and readiness for action by central banks in Europe, the UK, Japan and the US. Amid declining unemployment and rising consumer sentiment, the US Fed, the Bank of England, the Bank of Japan and others say they are ready to continue dovish monetary policy if needed.
The assessment of the current state of the German economy, however, has risen by two points to 10.6, the highest current level of the developed economies measured by ZEW. The US economy comes second at a positive 6.3 points – a gain of 7.2 points. The assessment of the UK economy, meanwhile, posts the largest gain in confidence, rising 11.1 points but remaining in negative territory with minus 54 points.
Globally, the outlook for Japan registers the biggest drop in the ZEW survey, falling 4.5 points to positive 45.9. France follows, with a decline of four points to 1.7. Italy’s six-month outlook falls 3.7 points to 11.5 and the outlook for the UK falls 2.5 points to 20.9.
The main ZEW indicator measures the six-month economic outlook for Germany, based on a survey of 257 analysts taken between July 1 and July 15. The numbers represent the difference between the percentage of analysts with positive outlooks and those with negative outlooks.
The outlook for the inflation rate has increased the most in Germany, with a rise of 14.3 points to 27.2, followed by the US, with a gain of 10.5 points to 35.8. Overall, inflation expectations are highest in Japan, which posts a 2.3-point increase to 55.9.
