-Credit Agricole
The latest GDP, unemployment and inflation reports all showed that Germany is still able to push the growth in the whole region, despite Ukraine tensions, political sanctions and worrying comments from the ECB. Morale among consumers and companies has fallen sharply in the recent months, and it seems, that despite the recently-announced action plan by the ECB, the morale is still contracting.
A report from the ZEW Center for European Economic Research unveiled its latest survey on Tuesday, saying a gauge of business morale in Europe's powerhouse worsened significantly in June, falling for the sixth straight month. Index, which was designed to evaluate the economic outlook for the next six month, fell to 29.8 in the sixth month of 2014, following May reading of 33.1. Analysts were expecting a pickup to 35.0. In comparison, in December 2013, the indicator stood at 62 points, an all-time high. At the same time, the current conditions index improved to 67.7 over the corresponding period from 62.1 a month earlier. It means that ECB's radical decision to bring rates to the negative territory had a short-term effect, as investors do not expect any significant improvement over the next six months. Germany posted a strong growth in the first quarter, due to favourable weather conditions. Nevertheless, second quarter's GDP is likely to be weaker.
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