German confidence takes a tumble on oil prices
Tuesday, 12 October 2004A leading confidence index in Germany fell sharply for the third month in a row, amid concerns about the runaway price of oil and indications that the global economic recovery is already running out of steam.
The ZEW economic research institute's economic expectations index, based on a poll of 297 analysts and institutional investors, tumbled by 7.1 points to 31.3 points in October, after already falling in the preceding two months, ZEW said in a statement.
The decline was sharper than expected. Analysts had been pencilling in only a fractional drop in the October index.
'The reason for the increased pessimism is the further rise in oil prices and expectations for a slowdown in global growth momentum,' ZEW President Wolfgang Franz said.
The ZEW indicator represents the balance between positive and negative expectations for the economy over the next six months. If the majority of analysts and institutional investors polled believe the economy will improve, the index shows a plus. If most are expecting a deterioriation, the index shows a minus.
ZEW also polls analysts and insitutional investors about their assessments of the current situation. The so-called 'current situation index' showed an improvement, with a reading of -58.9 points in October, compared with -61.5 points in September.
