German investors showed less pessimism than expected in October, even as the view of the current economic situation left little room for optimism after a drop in confidence the previous month.
Economic research institute ZEW said on Tuesday its economic sentiment index rose slightly in October to -59.2 from -61.9 in September, beating analysts polled by Reuters for a reading of -65. ,7.
In contrast, the institute’s current conditions index dropped 11.7 points in October to a reading of -72.2.
The announced price brakes for gas and electricity are helping to stabilize sentiment, said Andreas Scheuerle, an analyst at Dekabank, but the fact that they have not yet come into effect explains the deterioration in the way the economic situation is assessed.
Based on a proposal from a panel of experts, the German government will give households and small and medium-sized businesses a one-month payment of a month’s gas bill this year and then adopt a mechanism to cap prices from March.
But overall, “the economic outlook has deteriorated again,” said ZEW President Achim Wambach, who warned that the likelihood of gross domestic product falling over the next six months has increased considerably, a sentiment echoed by analysts.
In its forecast released this month, the German government forecasts economic growth of 1.4% this year and contraction of 0.4% next.
The ZEW indicators for Eurozone confidence and the assessment of current conditions mirrored those for Germany, with confidence rising slightly in October and the situation indicator falling sharply.
Source: CNN Brasil
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