German investor sentiment slips, but outlook still positive

GMT 13:34 2015 Tuesday ,14 July

Arab Today, arab today German investor sentiment slips, but outlook still positive

Difficulties in handling the Greek crisis
Frankfurt - AFP

Investor sentiment in Germany fell in July hitting its lowest level in eight months, but the outlook for Europe's biggest economy remains positive, a leading survey found on Tuesday.

The widely watched investor confidence index calculated by the ZEW economic institute slipped by just 1.8 points to 29.7 points in July, its lowest level since November 2014, ZEW said in a statement.

Analysts had been expecting a slightly steeper decline this month to 29.0 points.

"Neither the difficulties in dealing with the Greek sovereign debt crisis nor the turmoil on Chinese financial markets seem to impress the financial market experts strongly," said ZEW president Clemens Fuest.

"Despite the slight decline of the indicator, the overall economic outlook for Germany remains positive," he said.

For the survey, ZEW questions analysts and institutional investors about their current assessment of the economic situation in Germany, as well as their expectations for the coming months.

The sub-index measuring financial market players' view of the current economic situation in Germany beat analysts' expectations by rising by 1.0 point to 63.9 points in July, ZEW said.

Analysts said the Greek crisis is not having as damaging effect as some might have feared on the German economy.

"It seems as if German investors have taken the stance that the Greek crisis or even a 'Grexit' would not harm the German economy and therefore rather focused on the positive impact from the still weak euro exchange rate and the latest drop in energy prices," said ING DiBa economist Carsten Brzeski.

"Indeed, the macro-economic picture for the German economy does not look bad at all," the expert said.

"Whether it is naivety, indifference or just matter-of-factness remains to be seen. For the time being, however, investors' trust in the German economy is almost impossible to be upset," he said.

Capital Economics economist Jennifer McKeown was more cautious.

"Admittedly, the decline was not as sharp as we or the consensus had feared and the fact that the index remains firmly positive means that most investors expect conditions to improve," she said.

"But the decline is a worrying sign that the Greek crisis is damaging sentiment in the eurozone's largest economy despite the backdrop of a relatively weak euro and very supportive monetary policy," McKeown said.

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