Picture: 123RF/NOPPASIN WONGCHUM
Picture: 123RF/NOPPASIN WONGCHUM

Berlin — The mood among German investors turned positive in December, a survey showed on Tuesday, with an unexpected rise in October exports boosting hope for an upturn in Europe’s biggest economy.

The ZEW research institute’s monthly index of financial market experts found that sentiment about the outlook for the economy had shot up to 10.7 from -2.1 in November — the highest level since February 2018.

The reading exceeded even the highest forecast of economists, which showed a consensus prediction of zero.

Germany narrowly avoided a recession in the third quarter. Its export-orientated manufacturers have struggled against a backdrop of trade friction, a slowing car industry, and uncertainties over Britain’s planned departure from the EU.

On Monday, data showed German exports rose unexpectedly in October as demand from beyond Europe increased, helping buoy investor sentiment.

ZEW president Achim Wambach said the rise in morale “rests on the hope that German exports and private consumption will develop better than previously thought. This hope results from a higher-than-expected German foreign trade surplus in October, alongside relatively robust economic growth in the EU in the third quarter, and a stable German labour market”. 

In its 10th successive year of growth, Germany’s economy has been relying on strong consumption as exports weaken, which resulted in a second-quarter economic contraction of 0.2%. The economy grew by just 0.1% in the third quarter.

A separate ZEW gauge measuring investors’ assessment of the economy’s current conditions rose to -19.9 from -24.7 in the previous month. Analysts had forecast a reading of -22.3.

“The message is: the economy has bottomed out, without it pointing to a dynamic recovery,” said Thomas Gitzel, economist at VP Bank.

Bloomberg reports that European Central Bank (ECB) decision makers are due to meet this week for the first policy update under its new president, Christine Lagarde. Officials eased monetary policy in September to bolster the economy, and urged governments to step up fiscal spending at the same time — something Lagarde has called on Germany to do.

Reuters

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