Investor Confidence Slumps in April | Business| Economy and finance news from a German perspective | DW | 19.04.2005
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Investor Confidence Slumps in April

Investor confidence in Germany took an unexpected tumble this month, hitting the lowest level in four months, a new polled showed Tuesday, as experts become increasingly skeptical about the prospects for a turnaround in the euro zone's biggest economy this year. The ZEW economic research institute's economic expectations index, based on a poll of 311 analysts and institutional investors, slumped by 16.2 points to plus 20.1 points in April. The decline was much steeper than expected -- analysts had been penciling in a more modest fall to around 32.5 points this month. ZEW President Wolfgang Franz said recent disappointing orders data was weighing on investor sentiment in Germany. A "slackening off of global economic activity suggests that the pace of recovery in Germany is likely to slow in the medium term," he said. Recent data have indeed surprised analysts, with manufacturing orders sliding by 2.6 percent in February and industrial output falling by 2.2 percent. The ZEW indicator represents the balance between positive and negative expectations for the economy over the next six months. If most analysts and institutional investors polled believe the economy will improve, the index shows a plus. If most are expecting deterioration, the index shows a minus. The so-called "current situation index" showed a deterioriation, with a reading of minus 73.0 points in April, compared with minus 66.0 points in March.

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