German investor morale soars as outlook brightens
German investor confidence soared in January to its highest level since the start of the war in Ukraine, a key survey said Tuesday, as lower energy prices and cooling inflation boost the economic outlook.
The ZEW institute's economic expectations jumped by 40.2 points to 16.9 points in January, taking the monthly indicator back into positive territory for the first time since February 2022.
The increase -- which dwarfed analyst predictions -- is the latest signal that an expected slowdown in Europe's top economy will be less painful than initially feared.
Falling energy prices and support measures unveiled by the German government have eased concerns about a cost-of-living squeeze, while China's relaxation of Covid restrictions has lifted German exporters.
"The earnings expectations of the export-oriented and energy-intensive sectors have gone up significantly," said ZEW president Achim Wambach.
A recent drop in German inflation has added to the upbeat mood, he said.
Consumer price growth slowed to 8.6 percent in December, down from 10 percent in November as government interventions to bring down gas and electricity prices started to take effect.
Germany's economy grew by a better than expected 1.9 percent in 2022, in part thanks to mild weather that helped keep gas storage sites filled.
The country is nevertheless forecast to fall into recession this year, although the government's prediction in October of a 0.4-percent contraction now looks overly pessimistic.
Investors' "worry lines are disappearing", said DZ Bank economist Christoph Swonke. But "the economic situation remains challenging," he warned.
Germany's BDI industry association said Tuesday it expected the country's economy to shrink by 0.3 percent in 2023.
Source: Agence France Presse
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