Investor sentiment in Germany has slumped this month over concerns that sharply slowing growth in emerging markets would hurt the vital export sector of Europe’s top economy, a leading survey said yesterday.
The widely watched investor confidence index calculated by the ZEW economic institute sank 12.9 points from August to stand at just 12.1 points – a level not seen for almost a year and far short of analysts’ expectations.
“The weakening economic development in emerging markets dampens the economic outlook for Germany’s export-oriented economy,” ZEW president Clemens Fuest said. “While economy growth in the second quarter was largely driven by external demand, it is becoming less likely that exports will stimulate growth in the near future.”
The drop is the sixth consecutive monthly fall, with the index far lower than the 18.6 points that analysts polled by financial services company FactSet had been expecting.
Jonathan Loynes, chief European economist at Capital Economics, said the survey “confirmed that recent market turmoil and concerns over the global environment have had an adverse impact on German investor confidence”.
Nevertheless, the analysts were quick to point out that the German economic engine was in good shape and that weakness in demand from China could increasingly be compensated by growth in Europe and the United States.