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German ZEW Investor Confidence At 4-month High


Germany's investor confidence improved further at the start of the year to its highest level in four months, defying expectations for a weakening, survey data from the ZEW - Leibniz Centre for European Economic Research showed on Tuesday.

The ZEW Indicator of Economic Sentiment for Germany rose to -15.0 points from -17.5 in December, the Mannheim-based think tank said. Economists had forecast the index to ease to -18.5.

The latest reading was the highest since September, when the score was -10.6.

The current conditions index of the survey fell sharply to 27.6 from 45.3, marking the lowest level since January 2015.

"It is remarkable that the ZEW Economic Sentiment for Germany has not deteriorated further given the large number of global economic risks," ZEW President Achim Wambach said.

"The financial market experts have already considerably lowered their expectations for economic growth in the past few months."

Germany likely avoided a technical recession in the fourth quarter as the economy likely rebounded from the decline in the previous quarter with the dampening impact from the WLTP emission tests implementation in the automobile sector gradually coming to an end.

Official data released last week showed that the biggest euro area economy grew for a ninth year running, but the 1.5 percent expansion was the slowest in five years. Growth was largely driven by domestic demand.

The German economy shrunk for the first time since early 2015 in the third quarter of 2018, and at the fastest pace in nearly six years, mainly due to weak exports and car sales.

The Economy ministry has said the German economic growth is set to get stronger at the start of 2019, supported by high order backlog and a boom in the construction industry. Further, tax cuts and monetary benefits are set to boost consumer spending at the start of the year.

New, potentially negative factors such as the rejection of the Brexit deal by the British House of Commons and the relatively weak growth in China in the last quarter of 2018 have thus already been anticipated, ZEW's Wambach added.

The ZEW investor confidence measure for Eurozone edged up .1 points to -20.9. The current conditions index, meanwhile, shed 6.8 points to reach a level of 5.3 points.

The latest survey by the Sentix behavioral research institute showed that Eurozone investor confidence deteriorated for a fifth straight month in January to its lowest level in over four years.

The continuing protest of the yellow vests in France could weigh more heavily, while the possible "hard Brexit" and the lack of support from the global economy remain negative factors, the Sentix institute said. Meanwhile, the EU Commission's agreement with Italy in the trade dispute may offer some relief.

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