FRANKFURT (AFP) – The pall of gloom hanging over the German economy, Europe’s biggest, deepened in October as investment sentiment turned negative and fell to its lowest level in nearly two years, a survey showed Tuesday.
The widely watched investor confidence index calculated by the ZEW economic institute fell by 10.5 points to minus 3.6 points in October, its lowest level since November 2012, and the first time since then that it has been in negative territory, ZEW said in a statement.
It was the 10th month in a row that the index has fallen.
“ZEW’s financial market experts expect the economic situation in Germany to decline further over the medium term,” said ZEW president Clemens Fuest.
“Geopolitical tensions and the weak economic development in some parts of the eurozone, which is falling short of previous expectations, are a source of persistent uncertainty. These factors are tarnishing growth expectations in Germany,” Fuest said.
A raft of recent disappointing data, including factor orders, industrial production, and foreign trade “have likely contributed to the growing pessimism among financial market experts,” ZEW added.
Only last week, the country’s leading economic institutes slashed their growth forecasts for both this year and next.
And the German government is scheduled to publish its own latest updated forecasts later on Tuesday.
In the wider eurozone, industrial output fell by 1.8 per cent in August, the latest data showed, a steep drop and another sign that recession in the 18-nation currency bloc could return.