German Investor Sentiment May Plunge as Debt Crisis Hurts Euro

Bloomberg:

German investor confidence probably plunged in May after Europe’s debt crisis stoked concern about the euro’s future, rattling financial markets.

The ZEW Center for European Economic Research will today say its index of investor and analyst expectations fell to 47 from 53 in April, according to the median of 35 forecasts in a Bloomberg News survey. ZEW releases the report, which aims to predict developments six months ahead, at 11 a.m. in Mannheim.

The euro has slumped 8 percent against the dollar in the past month as a 750 billion euro ($923 billion) rescue package from governments and the European Central Bank’s purchase of government bonds failed to stem speculation that the monetary union could collapse. At the same time, the weaker currency is boosting export competitiveness, helping the economic recovery gather pace.

“The discussion about Europe’s debt crisis will hurt confidence for some time,” said Joerg Lueschow, an economist at WestLB AG in Dusseldorf. “Still, the significance for the real economy is limited. The recovery won’t stall and the weaker euro isn’t so bad for German exports.”

Germany’s economy, Europe’s largest, unexpectedly grew 0.2 percent in the first quarter as rising exports and company investment outweighed a slump in construction caused by the harshest winter in 14 years. Latest data suggest growth accelerated this quarter as building sites reopened with the arrival of spring.

Posted via email from Jim Nichols