Home News ZEW index shows decline in economic momentum

ZEW index shows decline in economic momentum

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Copy of 2010-08-17_Eiswürfelverpackungsanlage_ddpFRANKFURT (Dow Jones) – Economic expectations of financial analysts and institutional investors in Germany dropped in August to its lowest level in over a year and have it point to a weaker economic momentum in the coming months. The ZEW – assessment soared after the sharp rise of the German gross domestic product (GDP ) in the second quarter, however, to the highest level since early 2008. ( Reuters photo 🙂

Bank economists that growth in Germany is likely to slow down , but continue to remain robust. A relapse into recession is not expected.
As the Centre for European Economic Research ( ZEW) in Mannheim on Tuesday announced that the index of economic expectations fell to 14.0 points from 21.2 in July. The index reached its lowest level since April 2009 (13.0 points) and is well below the historical average of 27.3 points. Economists polled by Dow Jones Newswires had forecast on average a stagnation in the previous month’s level , but the prognosis was very wide margin .
"Against the backdrop of weakening global economic development is the financial market experts, the growth of individual branches euphoria obviously a bit fishy , "said ZEW President Wolfgang Franz results. The ZEW called a weak economic development of important foreign trade partners , such as the other euro countries and the U.S. as the biggest risk for the German economy. The growth of some large economies – including the U.S., Japan and China – had in the second quarter slowed to some extent already massive.
The economic situation in Germany , however, was far better evaluated than in the previous month. The index of the assessment climbed by 29.7 meter to plus 44.3 points in July after increase of 14.6 points for the first time since July 2008, again a positive value was recorded. Here, economists had a level of plus 21.0 points predicted.
Reason for the optimistic assessment – and the sharp decline in the expectations index – should be the dynamic economic recovery in Germany. The German economy was in the second quarter at a rate of 2.2 % as rapidly as never grown since reunification. However , the ZEW is expected that repeat the high growth rate can not be . " The decline of the indicator points to the fact now that it is not the enormous growth of the second quarter can be sustained , assessed the economic researchers .
This assessment was shared by Bank economists. These statements Commerzbank economist Ralph Solveen that the dynamics of the German economy was modified such that the growth rates can only just go back . " However, this probably means not the end of the current upward trend , but first and foremost a return to normal growth rates , "he said. Further declines in the ZEW expectations index were possible in the coming months, as a sign change in the assessment – which took place in July – historically the starting signal a downward trend in expectations had been .
Even Postbank economist Fabienne Riefer expected "that the German economy, which recently not on the day laid momentum in the second half of the year may hold. " Discontinued effects of the stimulus packages, the decline in thrust over the normalization of the stocks as well as saving in several European countries put a near future, although noticeably slower pace of economic activity, however, no shrinkage. " Overall, the increase in German GDP this year, probably by more than 3 %, " said Riefer .
A slightly stronger growth of the German economy in the current year expected 3.5% UniCredit economist Alexander Koch. speak for the last positive economic data and the low comparison base last year – was finally broken in 2009 , the German GDP by 4.7 %. Signs of an abrupt end to the economic recovery or references to an impending relapse into recession were not identify , even if the growth momentum is expected at year end now and next year to slow " significantly ". " The Ifo index will deliver next week so more information , "added Koch.

– By Katrin Haertel , Dow Jones Newswires , +49 (0 ) 69 29 725 300
konjunktur.de @ dowjones.com

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