Confidence among German investors surged to its highest level in three and a half years in October as the economy began to turn the corner with Europe showing signs of recovery, a survey by the Center For European Economic Research or ZEW revealed Tuesday.
The ZEW indicator of economic sentiment increased to 52.8 in October from 49.6 in September, the Mannheim-based think tank said. The index reading was the highest since April 2010.
The indicator has now increased for a third consecutive month. Economists had forecast the reading to remain the same as in September. ZEW surveys up to 350 financial experts for compiling the report.
The indicator measuring opinion about the current economic situation for Germany fell slightly to 29.7 from 30.6 in September. This was forecast to increase to 31.3.
"The financial market experts remain optimistic," ZEW President Clemens Fuest said. "At present a greater impact of the debate on the debt ceiling in the USA is not visible," he noted.
The ZEW economic expectations index for the Eurozone increased marginally to 59.1 in October from 58.6 in the previous month. The indicator for the current economic situation in the Eurozone decreased to -60.9 from -59.7.
The Ifo Institute's business climate survey for Germany showed last month that business confidence has improved for a fifth consecutive month in September as the economy made a confident start to the autumn.
The German economy expanded 0.7 percent sequentially in the second quarter after stagnating in the first quarter. The Bundesbank expects growth to continue in the months ahead.
The International Monetary Fund this month upgraded its economic growth projections for Germany and now expects the gross domestic product to grow 0.5 percent this year before expanding 1.4 percent in 2014.
However, the economy ministry was somewhat less optimistic about the economic prospects. In a report last week, the ministry said that Germany's economic growth will likely remain moderate in the second half of 2013. It also noted that the outlook for the export sector was weak.
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