ZEW index of investors confidence falls sharply to August 2012 lows in October

The indicator of investors confidence for Germany from ZEW Institute fell to -24.7 in October, matching the lowest point this year from July and the lowest reading since August 2012 when Brexit referendum results were feeding into the economic confidence. Particularly worrying is the current extent of monthly decline of 14.1 points that reflects 

With the reading of -24.7, the ZEW index’s current value is far below the long-term average of 22.8 points while the assessment of the current economic situation in Germany decreased by 5.9 points, leaving the corresponding indicator at 70.1 points in October.

Trade wars uncertainty and possible hard Brexit fears affected the reading of the ZEW index in October. ZEW President Professor Achim Wambach said that the “expectations for the German economy are dampening above all due to the intensifying trade dispute between the USA and China. The resulting negative expectations on German exports are now beginning to show in the actual development of exports. A further negative influence on economic and export expectations is the danger of a ‘hard Brexit’, which is becoming ever more likely. Last but not least, the situation of the governing coalition in Berlin is perceived to have become more unstable, which also weighs on economic sentiment.”

The financial market experts’ sentiment concerning the economic development of the Eurozone also dropped sharply to -19.4 points in October. The indicator for the current economic situation in the Eurozone for October has increased slightly by 0.3 points to a level of 32.0 points.

According to inflation survey, the inflation expectations for the Eurozone are rising again. The corresponding indicator rose 9.2 points to 33.2 points in October. Meanwhile, expectations for short-term interest rates in the Eurozone have increased, with the corresponding indicator rising by 8.3 points to a reading of 18.5 points.