FRANKFURT AM MAIN (AFP) – German investor confidence unexpectedly rebounded in April despite the coronavirus crisis, a key survey showed yesterday, as respondents saw “light at the end” of the tunnel.
The ZEW institute’s monthly barometer measuring economic expectations for the coming months surged to 28.2 points, up from March’s -49.5 points when the index hit its lowest level since 2011.
The April survey smashed analyst expectations, with those surveyed by Factset predicting a reading of -41.3 points.
“The financial market experts are beginning to see a light at the end of the very long tunnel,” ZEW Chief Achim Wambach said in a statement.
The surprise optimism comes despite a barrage of dire warnings for Europe’s top economy as it confronts the fallout from the coronavirus pandemic.
Some analysts cautioned against reading too much into the ZEW figure.
“In all honesty, this number is too good to be true,” said ING Diba bank analyst Carsten Brzeski. “Today’s ZEW index is another data point on the long road to fully grasp the magnitude of the COVID-19 crisis.”
Like other countries, Germany last month closed schools and many shops and businesses to curb the outbreak, changing consumer demands and upending supply chains.
Leading economic institutes have forecast that the German economy will shrink by nearly 10 per cent in the second quarter of 2020, plunging the country into a recession.
But a gradual loosening of the global lockdown measures, with Germany taking the first cautious steps this week already, is expected to help the country’s export-driven economy pick up speed in the second half of 2020.
For the whole year, the German Economy Ministry expects gross domestic product to contract by around five per cent – Germany’s worst performance since the financial crisis in 2009.
The ZEW survey of some 200 economists and analysts showed that respondents expected “positive economic growth” to return in the third quarter of 2020, Wambach said.
But they predict it will take until 2022 for Germany’s economic output to reach the same level as before the coronavirus crisis, he added.