- ZEW economic institute
German investor confidence declined to the lowest level since October 2014 as equities plunged amid slowing China's economic growth and worries over the profitability of Euro zone lenders. The ZEW institute reported that its confidence index plummeted to 1.0 points for February, compared with 10.2 points in the prior month. The current situation sub-index came in at 52.3 in the reported month, decreasing from January's 59.7 and missing analysts' expectations of 55.0 points. China's economic growth is slowing as officials try to rebalance the economy from traditional industry-led growth towards services-driven expansion. The pullback is weighing down German exports. The Bundesbank cut its forecast for German inflation, referring to renewed drops in oil prices. Consumer prices growth in the Euro zone's number one economy is expected to average approximately 0.25% in 2016, compared with a December prediction of 1.1%. For 2017, the estimates stood at 1.75%, down from 2%.
However, the central bank also said cheaper energy is stimulating the domestic economy and coupled with a robust jobs market may contribute to acceleration in growth this quarter. Thus, the central bank expects the growth pace to accelerate in the first quarter of 2016 compared with the end of 2015.
© Dukascopy Bank SA