German investor confidence surges in January

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Confidence among investors in Germany surged in January, a closely-watched survey showed Tuesday, in a further sign that a growth streak in Europe’s powerhouse could have much further to run. The ZEW institute’s monthly index of financial players’ economic expectations added 3.0 points to hit 20.4, a much sharper increase than the 0.5 points forecast by analysts.

Meanwhile, investors’ view of the outlook for the eurozone jumped 2.9 points to 31.8. Both results more than made up for a December slip. German is enjoying “a positive outlook for the first half of 2018,” ZEW president Achim Wambach commented in a statement.

“Private consumption, the most important driver of economic growth last year, should energize expansion in the coming six months too,” he added. Wambach also highlighted that “significantly more positive views of the global economic environment” contributed to the good mood, a factor underscored by the International Monetary Fund’s upgraded World Economic Outlook (WEO) forecasts Monday.

The IMF highlighted “the broadest synchronized global growth upsurge since 2010.” “Recent market developments reflect strong prospects for economic growth in both the eurozone and globally, which will support Germany’s export-oriented firms,” commented Capital Economics analyst Stephen Brown.

And there was no sign that arduous talks to produce a governing coalition in Berlin under Chancellor Angela Merkel have sapped investors’ mood, as judgements of the present economic situation in both Germany and the 19-nation eurozone both increased.

The investor confidence index “might receive a further boost next month if there is further progress towards forming a German government,” Brown suggested. Tuesday’s survey polled 212 analysts and institutional investors between January 8 and 22.

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