German Economic Confidence Weakens In December

Germany’s economic confidence weakened in December as supply bottlenecks continue to weigh on production and retail sales, survey results from the ZEW – Leibniz Centre for European Economic Research showed on Tuesday.

The ZEW Indicator of Economic Sentiment fell 1.8 points to 29.9 in December. Nonetheless, the score remained above the expected level of 25.1.

The current conditions index plunged 19.9 points to -7.4 in December. This was the first time since last June that the indicator entered the negative territory. The reading was forecast to fall to 5.0.

The outlook for economic development in the next six months also deteriorated considerably.

“The decline in economic expectations shows that hopes for much stronger growth in the next six months are fading,” ZEW President Achim Wambach, said. Especially the earnings expectations of export-oriented and consumer-related industries are assessed more negatively, Wambach added.

Meanwhile, sentiment among financial market experts regarding the economic developments in the euro area improved marginally in December. The corresponding index rose slightly by 0.9 points to 26.8 points.

Nonetheless, the situation indicator fell to a new level of minus 2.3 points, dropping 13.9 points compared to November.

Further, the survey showed that inflation expectations for the currency bloc continued to decline sharply in the current period.

The indicator currently stands at minus 33.3 points, which corresponds to a decrease of 19.0 points compared with the November result. About 54.6 percent of the experts expect the inflation rate to decline in the next six months.

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