German investor confidence fell for the ninth consecutive month in September, slumping to its lowest level in 21 months as concerns grew about the economic fallout from global tensions, a survey released Tuesday showed.

Made in Germany
Made in Germany

The closely watched indicator, which gauges the mood among analysts and institutional investors in Europe’s biggest economy, dropped to 6.9 points from an August reading of 8.6 points, the Mannheim-based ZEW institute said.

“The German ZEW sent more signs of caution, showing that at least financial market participants are quickly losing confidence in the German growth story,” said ING Bank economist Carsten Brzeski.

Based on a survey of 234 analysts, the ZEW now stands at its lowest level since December 2012.

But this month’s decline was less than expected by economists, who had forecast a slump to 5 this month in the indicator, which points to economic developments six months down the track.

“The downward trend … has slowed significantly,” said ZEW president Clemens Fuest. “However, the economic climate is still characterized by great uncertainty.”

Fuest said this included the risk of an economic trade war between the West and Russia as well as a continuing weak performance by the eurozone economy and the unknown consequences of Scottish independence.

But Brzeski said that “the solid fundamentals, domestic demand and exports to the US still form a substantial safety net against widespread fear and a period of economic drought in Germany.”

In addition to a slew of solid German economic data, the mood among investors has also been buoyed by the series of moves by the European Central Bank aimed at shoring up economic growth, including cutting interest rates.

The monthly ZEW survey also helps to set the stage for the release this month of a string of leading economic sentiment indicators, including Germany’s Ifo business confidence survey.

These have all dropped in recent months as uncertainty has grown about the possible economic fallout from global tensions.

This in turn has resulted in investors facing volatile financial markets around the world.

Those responding to the ZEW survey also grew more pessimistic about the current economic conditions in Germany.

The corresponding index dropped sharply to 25.4 this month from 44.3 in August.



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