German Investor Confidence Gains After ECB Steps Up Stimulus

  • ZEW expectations index increases to 16.1 in December
  • Resilient domestic demand and ECB stimulus boost sentiment

German investor confidence improved for a second consecutive month, with a robust recovery in Europe’s largest economy set to gain impetus from more stimulus by the European Central Bank.

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months ahead, rose to 16.1 in December from 10.4 in November. That compares with an estimated increase to 15 in a Bloomberg survey of economists.

While the ECB’s Dec. 3 stimulus package fell short of investors’ expectations, it’ll still help bolster the recovery in the 19-nation currency bloc, Germany’s biggest trading partner. That should ease concerns over challenges including an influx of refugees and a slowdown in emerging markets.

“The economic slowdown in emerging markets is exerting pressure on the German export industry,” ZEW President Clemens Fuest said in the report. “Overall, however, confidence is growing that the German economy is sufficiently robust to meet these challenges in the coming year.”

ZEW’s gauge for current conditions in Germany rose to 55 in December from 54.4. A measure for business expectations in the 19-nation euro region increased to 33.9 from 28.3.

Bundesbank Outlook

The DAX Index of German stocks was up 1.8 percent at 10,321 at 11:30 a.m. Frankfurt time. The euro was 0.4 percent higher at $1.1030.

A further reason for optimism may be the Federal Reserve’s first U.S. interest-rate increase in almost a decade, expected on Wednesday, which would signal strength in the world’s biggest economy.

The Bundesbank this month kept its 2016 growth forecast for Germany unchanged at 1.8 percent and projected an expansion of 1.7 percent in 2017.

“With export markets outside the euro area expected to rebound and economic growth within the euro area gaining a little more traction, the healthy underlying state of the German economy should stand out even more clearly over the next two years,” it said on Dec. 4. “Downside risks to economic growth would arise if the current sluggish dynamics in a number of emerging-market economies were to worsen.”

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