-Dominik Rehse, ZEW economist
German investors remained optimistic in April, even though sentiment unexpectedly deteriorated. The ZEW indicator of economic expectations declined to 53.3 in April from 54.8 in the preceding month, marking the first decline since October 2014. However, the gauge of current conditions surged to 70.2 points in the measured month, up from 55.1 in March, overshooting forecast for 56.0. In the latest World Economic Outlook the IMF revised its growth projections for Germany upwards, saying the economy is now expected to expand 1.6% this year and 1.7% in 2016. Falling oil prices, lower interest rates, as well as Euro depreciation, and the shift to a broadly neutral fiscal stance are estimated to boost activity in the coming years. Moreover, the Euro zone's number one economy is receiving added impetus from the European Central Bank's asset-buying programme worth 60 billion euros a month.
Meanwhile, the Euro zone's ZEW economic sentiment index rose more than expected last month, official data showed. ZEW said that its gauge measuring economic sentiment in the Euro area climbed to a seasonally adjusted 64.8, from 62.4 in the previous month. Analysts, however, had predicted Euro zone ZEW economic sentiment to rise to 63.7 last month.
© Dukascopy Bank SA