German Economic Sentiment Declines in June

A closely-watched gauge of economic sentiment in Germany fell sharply in June as a combination of worse-than-expected export data and trade tensions between the US and China appeared to have dented analysts’ views of the nation’s growth prospects.

The ZEW Indicator of Economic Sentiment for Germany, which is based on a survey of 192 analysts, posted a reading of minus 21.1 points this month, down 19 points from the previous month and well below the indicator’s long-term average of 22 points.

Over the same period, the assessment of the economic situation in Germany slightly worsened by 0.4 point, with the corresponding indicator falling to a current reading of 7.8 points.

“The sharp drop in the ZEW Indicator of Economic Sentiment coincides with an increased uncertainty regarding the future development of the global economy and substantially worsened figures for the German economy at the beginning of the second quarter,” Achim Wambach, president of the ZEW, said.

“The intensification of the conflict between the USA and China, the increased risk of a military conflict in the Middle East and the higher probability of a no-deal Brexit are all casting a shade on the global economic outlook. On top of this, German industry has been reporting worse than expected figures for production, exports and retail sales for April.”

The financial market experts’ sentiment concerning the economic development of the Eurozone also experienced a significant drop, with the corresponding indicator currently standing at minus 20.2 points, 18.6 points below the reading from the previous month,the ZEW stated.

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