German investor sentiment hits 20-month low in August - ZEW

Tuesday 12 August 2014 18.41
ZEW economic institute fell to its lowest level since December 2012 in August
ZEW economic institute fell to its lowest level since December 2012 in August

Investment sentiment in Germany fell to its lowest level in nearly two years in August amid concerns about the economic fallout from current global crises, a survey found today. 

The widely watched investor confidence index calculated by the ZEW economic institute fell by 18.5 points to 8.6  points in August, its lowest level since December 2012.

Analysts had been projecting a shallower drop to 18 points this month. 

"The decline in economic sentiment is likely connected to the ongoing geopolitical tensions that have affected the German economy by now," ZEW said. 

The institute did not elaborate further, but the German economy ministry said in a report earlier that the Russia-Ukraine crisis is taking its toll on Europe's top economy, as well as the turmoil in the Middle East. 

"In particular, current figures on industrial production and incoming orders suggest markedly reduced investment activities on the part of German firms against the backdrop of uncertain sales prospects," the statement continued. 

"Since the economy in the euro zone is not gaining momentum either, the signs are that economic growth in Germany will be weaker in 2014 than expected," it said. 

For the survey, ZEW questions analysts and institutional investors about their current assessment of the economic situation in Germany, as well as their expectations for the coming months. 

The sub-index measuring financial market players' view of the current economic situation in Germany fell by 17.5 points to 44.3 points in August, its lowest level since January. 

A frequent criticism of the ZEW index is that it can be volatile and is therefore not particularly reliable.