ZEW: German economic sentiment worsens strongly

Tuesday, 13. August 2019 11:03

Economic sentiment in the euro area deteriorated rapidly in the Eurozone in the past month as well as in its largest economy, according to an update to the expectations measure calculated by the Centre for European Economic Research (ZEW).

The headline forward-looking index for Germany plunged by a stunning 19.6 points to 44.1 below zero, the lowest level since December 2011 and 65.7 points below trend. The current conditions indicator weakened 12.4 to 13.5 points in negative territory for August, the deepest mark since May 2010. The euro area indexes nosedived 23.3 points to 43.6 in the red, the worst reading since December 2011, and 3.9 points to minus 14.5, respectively. The inflation index for the monetary union gained 0.6 points to 1.1 under zero. It fell 5.2 points from last month's zero balance for Germany. Economic expectations for the United States, Japan, Britain, France and Italy all worsened strongly.

"The most recent escalation in the trade dispute between the US and China, the risk of competitive devaluations, and the increased likelihood of a no-deal Brexit place additional pressure on the already weak economic growth. This will most likely put a further strain on the development of German exports and industrial production,"​ head of the institute Achim Wambach said.

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