Boost in confidence comes amid expectations the eurozone crisis is easing, ZEW indicator shows
Investor confidence for Germany rose for a third straight month in February, on the perception that the European sovereign debt crisis is easing and expected growth elsewhere will further help the German economy, according to the ZEW Centre for European Economic Research.
The ZEW indicator of economic sentiment for Germany rose 16.7 points in February, after an increase of 24.6 points in January and 22.6 in December, sending the index to 48.2 points, ZEW says in a press release today. The index has risen rapidly since November, when it stagnated in negative territory, indicating that investors expected economic deterioration.
The increase in investor confidence in Germany last month comes despite the disappointing performance of the German economy in the fourth quarter of 2012. Data released last week shows gross domestic output shrank 0.6 percent in comparison with the third quarter, as the French economy contracted 0.3 percent and the Italian economy by 0.9 percent.
‘The financial market experts have made their peace with the weak fourth quarter of 2012,’ says Wolfgang Franz, president of ZEW, in the release. ‘In their opinion the German economy faces fewer headwinds from the euro crisis than throughout the last few months. If this situation remains unchanged during the next few months, German business activity may pick up speed moderately.’
The main ZEW indicator measures the six-month economic outlook for Germany, based on a survey of 272 analysts taken between February 4 and February 18. The numbers represent the difference between the percentage of analysts with positive outlooks and those with negative outlooks.
The indicator for confidence in Germany’s current economic situation fell 1.9 points to 5.2, according to the data. Germany remained the only country measured by the survey to maintain its current economic assessment in positive territory.
The six-month economic outlook for the eurozone as a whole rose 11.2 points to 42.4, a level close to that of Germany itself. Expectations for the French economy rose 6.6 points to 13.5 while expectations for the UK increased 1.8 points to 20.2. Italy was the worst performer among the countries measured by expectations, dropping 3.3 points to 16.3. The US gained 11.2 to 46.2 and Japan increased 11.8 to 39.6 points.
Analysts’ assessment of the current economic condition of the eurozone was little changed, declining 0.3 points to negative 75.6. The UK suffered the biggest deterioration as its indicator fell 3.9 points to minus 72.1, followed by France, which posted a drop of 3.4 points to minus 78.2, according to ZEW.