German investor sentiment declines in December; Euro zone inflation climbs 0.2%

Source: Dukascopy Bank SA
"The climate of uncertainty may affect consumer spending but German fundamentals remain strong."
 - Anna Maria Grimaldi, an economist at Intesa San Paolo SpA 

Investor confidence in Germany declined in January for the first time in three months amid a turbulent start to the year for global equity markets triggered by concerns about China's economic outlook. The ZEW Center for European Economic Research reported that its index of investor and analyst expectations dropped to 10.2 in January, down from December's 16.1. Furthermore, the current situation index came in at 59.7 in January, climbing from December's reading of 55.0, while analysts had expected the numbers to record 53.1. German  gross domestic product increased 1.7% in 2015, according to the Federal Statistics Office. The Bundesbank predicts the Euro zone's number one economy to grow 1.8% this year and 1.7% in 2017.

In the mealtime, inflation in the Euro zone came in at 0.2% in December, in line with preliminary estimates, translating into an annual rise of 0.2%. Given disappointing industrial production data, moribund inflation and slow growth, analysts are wondering whether the ECB could signal more stimulus when it gathers this coming week. In December, the central bank failed to meet market expectations for the bank to expand its QE programme. It decided instead to widen the range of asset purchases it makes, prolong the programme to March 2017 and announced a slightly more modest deposit rate cut.

© Dukascopy Bank SA

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