German investor confidence plunged this month because of euro zone debt worries and fears that austerity measures will hurt growth, a closely watched survey showed today.
The closely watched but volatile financial sector indicator fell by 17.1 points to 28.7 points, well below an average analyst forecast for a drop to 42.5 points.
'Economic sentiment is weakened by the uncertainty about the future developments of the debt crisis and the perspective of necessary cuts in public expenditure in EU-member countries,' a statement said.
This was the lowest level for the index since April 2009, when it stood at 13 points, and represented 'a worrying sign for the future,' analysts said. It was also the sharpest drop since October 2008, they noted.
The survey of 279 analysts and institutional investors is now close to its long-term average of 27.4 points, the data showed. But 'despite the decrease of the economic expectations, the economic outlook still remains positive,' ZEW said.
'The current recovery is still fragile. Fiscal policy is therefore well advised to define necessary consolidation measures now, but not to implement them until 2011,' ZEW president Wolfgang Franz said.
