FRANKFURT, Nov 13: German investor confidence fell sharply in November, underscoring that an international financial crisis is still playing out in the biggest eurozone economy, a widely watched survey showed on Tuesday.
The report from the ZEW economic institute also found that the weak dollar, and the fast appreciating euro, had begun to weigh on German exports.
The institute’s indicator of German business sentiment fell to an indexed minus 32.5 points, from minus 18.1 points in October, ZEW said in a statement.
“The financial crisis is not over yet,” a statement quoted ZEW president Wolfgang Franz as saying.
“It is, therefore, to be expected that the economic development may lose considerable speed.” The survey of 269 financial analysts and institutional investors gives an indication of the sector’s medium-term expectations for economic activity and capital markets.
ZEW said that “owing to the continuously extending sub-prime crisis the financial market experts have re-adjusted their economic expectations. They, particularly expect a considerable economic downturn in the United States.” Waves of defaults on high-risk mortgages in the United States, the so-called sub-prime market, led banks and financial institutions to sharply curtail credit worldwide, choking off an essential ingredient for economic growth.
Meanwhile, “the weak US-dollar has made business conditions for German exporting firms more difficult,” ZEW added. Additional risks stemmed from oil rates that are now near $100 a barrel, and a surge in consumer prices.
For the 13-nation eurozone, economic expectations also dropped sharply, though a measure of the current economic situation decreased by a much smaller amount, and stood at plus 60.6 points, a level which ZEW qualified as “good.” Elsewhere, eurozone factories and refineries cut back faster than economists expected in September, official EU data showed.—AFP
