AN investor morale fell in August to its lowest level since April 2009, pointing to a slowdown in Europe’s largest economy but no risk of it or the broader Eurozone falling back into recession.
The ZEW think tank said yesterday that its monthly poll of economic sentiment fell to 14 from 21.2 in July, declining for the fourth month in a row on concerns that a slowdown will hit Germany’s export-orientated growth spurt. The reading, well below the consensus forecast for a drop to 21, followed news that the economy grew by 2.2 per cent in the second quarter – its fastest quarterly expansion since reunification.
Reflecting the economy’s strength after the record second quarter, a separate ZEW gauge of current conditions rose to 44.3 from 14.6 in July, surpassing all forecasts. The ZEW said the increase was the strongest in the history of the indicator.
But ING’s Carsten Brzeski said: “While some might still be inebriated by last week’s breathtaking growth numbers, today’s ZEW index was a good reminder that even the German economy will return to normal dimensions soon.”
The drop in expectations pointed to slower growth ahead. “The recovery won’t continue at this pace” said BHF Bank economist Peter Meister. Capital Economics’ Jennifer McKeown was more downbeat: “As global demand growth slows further and consumers remain reluctant to spend, the recovery is likely to be fairly short-lived.”