World Economy

German Investor Sentiment Drops

German Investor Sentiment DropsGerman Investor Sentiment Drops

Investors in Germany are less confident than a month ago, the widely watched ZEW index for April shows. It is the first drop in six months and comes despite solid growth in Europe’s largest economy.

The index, which is calculated by one of the leading economic institutes in Germany, the ZEW, from a poll of 238 analysts and institutional investors, dropped 1.5 points to 53.3 points in April, quashing analysts’ hopes of a further increase this month, DW reported.

“The German economy is in good shape. A stable labor market and rising wages are strengthening confidence and boosting consumption,” ZEW President Clemens Fuest said.

“However, the current weakness of the world economy is dampening export prospects and reducing the scope for further improvements of the economic situation in Germany,” Fuest added.

But the sub-index measuring financial market players’ view of the current economic situation in Germany jumped by 15.1 points to 70.2 points in April, its highest level since July 2011.

Low inflation, the weak euro and record employment has led Germany’s leading economic institutes to raise their growth forecast from 1.2 percent to 2.1 percent for 2015.

The ZEW index has in the past been criticized for being volatile and, therefore, not always reliable.

Meanwhile, leading European economic institutes have sharply raised their growth forecast for the German economy this year. They predict output will expand strongly thanks to cheap oil, the weak euro and strong consumer spending.

In a significant upward revision from their autumn growth estimate, the economic think tanks forecast Germany’s gross domestic product (GDP) will rise by 2.1 percent in 2015, rather than 1.2 percent as they predicted in October.