2023-12-12 11:26:10
German investor sentiment improved in December, economic research institute ZEW said on Tuesday, as expectations grew for an interest rate cut by the European Central Bank in the medium term.
The institute reported an increase in its economic climate index to 12.8 points in December, compared to 9.8 points in November, exceeding the expectations of analysts polled by Archyde.com who expected a slight drop to 8.8 points.
December marks the fifth consecutive month of increases in the expectations index, suggesting that respondents expect the economic situation in Germany to improve over the next six months.
The assessment of the current situation in Germany also increased slightly in December, from -79.8 in the previous month to -77.1.
“Despite the current budget crisis, the assessment of the situation and economic expectations for Germany have improved slightly again,” said ZEW President Achim Wambach.
“This is because the share of respondents who expect interest rate cuts by the ECB in the medium term has doubled,” added Wambach.
The construction industry was significantly more optimistic in its expectations this month, Wambach said.
ECB board member Isabel Schnabel, widely seen as a hawk, told Archyde.com last week that the bank could no longer consider further hikes and that policymakers should not expect rates stable until mid-2024.
Analysts said the ZEW survey results reinforced signs of a slight improvement in the German economy, albeit at a low level.
“Regardless of whether the upward trend continues, however, the emerging driving forces are still very weak and fragile,” said Elmar Voelker, analyst at LBBW.
Mr. Voelker stressed that the current low valuation index indicated a high degree of economic pessimism in the short term.
“Nevertheless, with today’s data, there is a good chance that the Ifo business climate for December will again be slightly upwards,” Voelker added.
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