AFP – German investor confidence fell significantly more than expected in September, a survey showed yesterday, as a hoped-for recovery in Europe’s largest economy seemed to recede from view.
The ZEW institute’s closely watched economic expectations index fell to 3.6 points, down sharply from 19.2 points a month earlier.
Analysts surveyed by financial data firm FactSet had predicted a much smaller decline to 16.6 points.
The September drop comes after the indicator dropped 22.6 points in August, its worst decline in two years.
“Hopes for an improvement in the economic situation in the near future are dwindling,” ZEW president Achim Wambach said in a statement.
The fall was driven by lower economic expectations for the eurozone as a whole, but particularly for Germany, Wambach said.
The low reading came despite the European Central Bank’s (ECB) decision to lower interest rates last week to provide relief to businesses.
“Most respondents seem to have already factored in the ECB’s interest rate decision when forming their expectations,” Wambach said.
Germany, traditionally the motor of European growth, was the only major advanced economy to shrink in 2023 as it battled high inflation.
The economy has struggled to get going again in 2024, with output unexpectedly contracting in the second quarter of the year.
The poor economic performance has been punctuated by bad news for a number of Germany’s flagship companies.
Auto giant Volkswagen said earlier this month it would consider closing sites in Germany, an unprecedented move its managers say has been forced on them by difficult economic conditions.
