German investor confidence is restored
German investor confidence is restored in November, supported by sustainable domestic demand and prospects for more stimulus from the European Central Bank. Preparation of the institute ZEW index of expectations of investors and analysts in the development of the economy over the next six months rose to 10.4 points compared to 1.9 in October. This is the first improvement in six months and significantly exceeds expectations for growth to 6 points, notes Reuters. Most answers to the surveyed experts were collected before the terrorist attacks in Paris.
While German business to suffer from the slowdown in exports to emerging markets, it also benefits from record low unemployment, cheap credit and a weakening of the currency. ECB President Mario Draghi has repeatedly signaled that the end of the year the central bank may further loosen monetary policy, which will increase these benefits to the German economy.
"Most respondents see an opportunity for further reduction of interest rates in the euro area over the next six months," said Dominique Resch, an analyst at ZEW. "Sentiment in the results obtained after the attacks in Paris - 18% of all did not differ from previously received answers. Neither on Germany nor France and throughout the euro area," he says.
ZEW institute also noted that concerns about the wider economic impact of the scandal automotive concern Volkswagen are "exaggerated." In October, sales and market share of the company in Europe shrank, but the other German manufacturers grew.
The separate ZEW index of current economic conditions in Germany declined slightly to 54.4 points in November from 55.2 the previous month. The index for expectations for the development of the entire area also decreased slightly.
Although German economic growth to slow in the third quarter with the whole euro area, the unemployment rate in the country remains at a record low of 6.4%. The weak rate of the euro due to money printing by the ECB in turn makes German exporters more competitive. "Hopes for new stimulus from the ECB and sustainable low exchange rate of the euro obviously increased investor optimism. Therefore there is no reason for fears of stagnation of the economy," said Carsten Brzeski, an analyst at ING-Diba.
"The outlook for the German economy improved towards the end of the year. Pessimistic, it seems, have not increased since the terrorist attacks in Paris. The current high levels of consumption in Germany, the recent depreciation of the euro and the continuing recovery in the United States will probably secure stable development of the economy of Germany, "says the head of the institute ZEW Clemens Fustel.