Recovery concerns for Germany as investor confidence falls

| July 14, 2009
”Recovery

The Zew economic sentiment index has revealed German analyst and investor confidence fell in July for the first time since October 2008.

The index, which measures expectations of economic activity over the next six months, fell from 44.8 in June to 39.5 in July.

According to Zew, respondents had expressed concern over whether lending to firms and households would work out – a problem that posed “considerable risk for the future development of the German economy”.

The index was based on a survey of 289 analysts and investors and conducted between June 29 and July 13 and the reading has sparked fears for a recovery in Europe’s largest economy.

In contrast, last week a 0.3% rise in exports sparked hopes of a tentative economic recovery. For the last six years, Germany has been the world’s biggest exporter of goods.

In the first quarter of 2009, Germany’s economy contracted by 3.8% on the back of slumping demand for exports.

Meanwhile, a recent survey by the IFO Institute said confidence in companies across all sectors of the economy had risen to a seven-month high in June.

However unemployment continues to rise in Germany with the latest figures showing that almost 3.5 million people are unemployed.

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