German investor confidence drops significantly | Business| Economy and finance news from a German perspective | DW | 13.11.2012
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German investor confidence drops significantly

Confidence of German investors in the short-term development of the domestic economy has taken a blow lately, says a fresh study by a prominent think tank shows. It suggests that Germany may slide into recession soon.

Investor confidence in Germany posted a marked fall in November amid wider concerns that Europe's economic powerhouse could run out of steam soon.

A closely-watched survey by the Mannheim-based Economic Research Institute (ZEW) showed its index gauging the mood among analysts and institutional investors had dropped from minus 11.5 points in October to minus 15.7 points in November. This ended two consecutive monthly gains and set the stage for a large number of economic sentiment studies to be released in the next few weeks.

"The signs of recession in many parts of the eurozone are having a mounting impact on investor confidence and exports," ZEW Chief Wolfgang Franz said in a statement.

Little optimism left

While investors' expectations for the future appeared to be rather gloomy, their assessments of the current business environment also turned out to be negative. The corresponding sub-index dipped by 4.6 points in November.

The analysts polled reckoned with no more than 0.2-percent growth for the third quarter and added that the final three months in the year could well see gross domestic product (GDP) contracting for the first time since the end of 2011.

"The third quarter should still have been more or less okay," BHF Bank Economist Uwe Angenendt commented. "But the odds are that we'll be heading towards recession in the winter months."

hg/kms (AFP, Reuters)