German Economic Sentiment Rebounds As Covid-19 Concerns Ease
21 Aprile 2020 - 10:33AM
RTTF2
German economic confidence improved strongly in April to its
highest level in nearly five years, as financial market experts
turned optimistic though their assessment of the current situation
hit a near 11-year low amid the lockdown triggered by the
coronavirus, or Covid-19, pandemic.
The ZEW Indicator of Economic Sentiment advanced 77.7 points to
28.2 points in April from -49.5 in March, survey data from the ZEW
- Leibniz Centre for European Economic Research showed Tuesday.
After logging the sharpest fall on record, the reading reached
its highest level since July 2015, and was well above the forecast
of -42.3.
Meanwhile, the current conditions index plunged 48.4 points to
-91.5 points from -43.1 a month ago. This was the lowest score
since May 2009. The expected reading was -77.5.
This constellation of values currently witnessed for
expectations and the assessment of the current situation roughly
corresponds to that seen in April/May 2009 during the financial
crisis, ZEW said.
ZEW President Achim Wambach said the financial market experts
are beginning to see a light at the end of the very long
tunnel.
The results of the special questions on the coronavirus crisis
included in the survey show that the experts do not expect to see
positive economic growth until the third quarter of 2020, Wambach
added.
Economic output is not expected to return to pre-corona levels
before 2022.
The Bundesbank on Monday said the German economy plunged into a
severe recession following the containment measures taken to
contain the spread of coronavirus. Moreover, the bank said an
immediate recovery is unlikely.
"How big the decline in overall economic activity will
ultimately be is currently difficult to predict," the central bank
said.
The bank estimated that the lockdown has impacted several
services sectors and this could have led to an over 1 percent
decline in the GDP in the first quarter.
The survey suggests that investors are now expecting some
recovery from the complete collapse in activity over recent weeks,
Jessica Hinds, an economist at Capital Economics, said. But any
improvement is likely to be very slow.
In all honesty, this number is too good to be true, Carsten
Brzeski, an ING economist, said.
It probably reflects the stock market rally of the last few
weeks, central bank and government action as well as a good portion
of optimism that up to now all viruses eventually ended with a U-
or V-shaped recovery, he added.
Financial market experts' sentiment regarding the economic
development of Eurozone also considerably strengthened in
April.
The economic confidence index for the currency bloc advanced
74.7 points to 25.2 points in April. By contrast, the indicator for
the current economic situation declined 45.4 points to -93.9.
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