German investor confidence unexpectedly fell for the second month in a row in April, a poll showed on Tuesday, as a result of concerns about the banking sector and worries about high inflation rates.
German investor confidence unexpectedly fell for the second month in a row in April, a poll showed Tuesday. This is due to concerns about the banking sector and concerns related to high inflation rates.
The economic sentiment index of the Institute for European Economic Research “ZEW” fell from 8.9 points to 4.1. The “ZAD EY” index is based on a survey taken from German analysts and investors, asking participants to give their opinion on the current economic climate and the future direction of the economy. The reading is based on the ratio of optimism to pessimism. If the majority of participants are optimistic, the reading is above zero, and if the response is more pessimistic, the reading is below zero.
While the index remains in positive territory, the reading was much worse than market expectations for economic confidence growth, with analysts polled by financial data firm FactSet expecting a slight increase.
The index, which assesses the prospects for the German economy, recorded its first decline in six months in March, which was rocked by the collapse of three US regional banks and the acquisition of Credit Suisse by UBS.
ZAD EY President Achim Wambach said that although fears about the possibility of a major financial crisis have receded, investors are still worried that banks could be more cautious in granting loans. He said, “Inflation rates, which are still high, and the internationally restrictive monetary policy, are burdening the economy.”
Energy and food prices rose last year after Russia’s invasion of Ukraine and Moscow cut gas supplies to Europe, prompting the European Central Bank to dramatically raise interest rates.
Last year’s crisis led to a significant decline in the ZED EY index and other economic indicators, although most of them recovered later with Berlin launching aid measures and fears of a sharp slowdown.
The economic confidence index issued by the “ZADE” institute in Germany and Europe relies on conducting a survey of approximately 275 investment institutions and German economic analysts, as they are able to determine the relative economic expectations for the next six months for the whole of Europe and Germany. The index is an early indication of the future of economic activity.