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German Investor Sentiment Stays Weak as Trade Tensions Bite

German Investor Sentiment Stays Weak as Trade Weighs on Economy

(Bloomberg) -- Investor confidence in Germany’s economic outlook remained weak in the latest sign of concern that the nation has slipped into a recession amid trade tensions.

ZEW’s index of expectations for the next six months declined to minus 22.8, compared with minus 22.5 last month. Measures of current conditions in Germany and of expectations for the euro zone both worsened.

German Investor Sentiment Stays Weak as Trade Tensions Bite

Europe’s largest economy contracted in the second quarter and fears have mounted that the downturn at factories -- orders have fallen year-on-year for 15 straight months -- will spread to the far-bigger services sector. While the U.S. and China might be close to a partial trade accord, British and European Union negotiators still haven’t found a way to avoid a no-deal Brexit.

“The recent settlement in the trade dispute between the U.S. and China does not seem to diminish economic skepticism at this stage,” ZEW President Achim Wambach said in a statement.

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“The latest ZEW figures point to lingering weakness in the German economy that will extend into 2020. The expectations figures are a little more pessimistic than our own forecasts, for no growth in 4Q and a modest expansion in 1Q.”

Jamie Rush. See his GERMANY REACT

The European Central Bank eased monetary policy last month to support the euro zone, but at the same time urged the governments of wealthier countries to step in fiscal spending to revive growth. After that meeting, President Mario Draghi said it is “high time for the fiscal policy to take charge.”

Those calls have gone largely unanswered in Germany so far. Finance Minister Olaf Scholz has said the government is ready to act in moments of a crisis but will stick to a balanced budget for now. Chancellor Angela Merkel said the problem isn’t a shortage of money for investment and there are sufficient projects in the pipeline.

--With assistance from Kristian Siedenburg and Harumi Ichikura.

To contact the reporter on this story: Yuko Takeo in Frankfurt at ytakeo2@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jana Randow

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