German investor confidence knocked by Ukraine crisis

Harriet Green
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Investor confidence in the Eurozone reached a high last seen in July 2011 this month.

The Zew survey, which is released by the Centre for European Economic Research, gave a reading of 61.2 for April, down slightly on the 61.5 seen last month and above expectations of 60.7.

But the survey also measures investor sentiment in Germany, giving a reading of 43.2 for the economic powerhouse.

That’s a fall from March’s 46.6, and below the expected reading of 45.0. This cautious sentiment (anything below 50 signifying pessimism) is likely fuelled by worries over the current situation in Ukraine.

Christian Schulz of Berenberg points out the index fell for the fourth time in a row in Germany, and is now at its lowest level since August of last year. The situation in Ukraine continues to sow uncertainty among financial analysts, he says.

[It] points to a slowdown in German economic momentum over the coming 6 months, but clearly not to a new stagnation or even recession.

The impact comes at a time of economic strength and, although Germany is more exposed to Russia and Ukraine via energy supply links than other European nations, it's "in the best position to deal with the fall-out" from the crisis, says Schulz.

The country could "act as a shield for the Eurozone recovery overall", he adds. That said, "despite optimism for the Eurozone overall, German investors [have become] even more sceptical with regards to the reform laggards Italy and especially France."

Trade surplus

Meanwhile, the Eurozone’s trade surplus has come in at €13.6bn in February. In January, it was €800m and analysts had expected the lower figure of €8.5bn.

Germany’s trade surplus was €12.7bn in the month.

Howard Archer of IHS Global Insight comments:

A decent trade surplus in February fuels hopes that net trade can once again made a significant positive contribution to Eurozone GDP growth in the first quarter of 2014 after lifting the rate of expansion in the fourth quarter of 2013.

IHS expect Eurozone GDP to have "firmed modestly" to 0.4 per cent quarter-on-quarter in the first quarter of 2014. At the end of 2013, growth was at 0.3 per cent.