German economic outlook swings positive for first time in a year
Current conditions languish as sentiment signals worst may be over for economy
The outlook for Germany’s economy brightened markedly this month, according to a key survey of analysts that suggests Europe’s powerhouse may be gaining momentum after a slowdown in recent months.
The Zew survey’s indicator of economic sentiment rose in April to 3.1 points, extending a rise to a sixth month and move into positive territory for the first time since March last year. A Reuters poll had shown a consensus of 0.8 points. In March sentiment had been minus 3.6 points.
The Mannheim-based research house said the improvement in sentiment was largely based on the hope that global economic environment will “develop less poorly than previously assumed”.
The Zew index “adds to tentative evidence that a gradual rebound of the German economy is in the making”, analysts at ING said.
Still, the Zew report noted that “the outlook for the German economy in the coming six months . . . remains greatly subdued.”
The institute revealed that current conditions in April were 5.5 points, lower than the 8.0 points forecast in a Reuters poll, and its seventh consecutive decline. The month before the figure was at 11.1.
Geopolitical factors, such as tension between the US and China over trade and the process of the UK leaving the EU, have plagued the eurozone and its largest economy over recent months.
The Zew institute said in its monthly report that postponing the Brexit deadline may have contributed to boost the economic outlook. The UK was initially scheduled to leave the bloc on March 29, which was then postponed to April 12. It has since been postponed again.
The latest economic data nonetheless point to “rather weak economic development”, Zew said.
The survey, which began in 1991, calculates its index from the difference between the percentage of analysts who are optimistic about the German economy over the next six months and those who are pessimistic.