- Clemens Fuest, ZEW institute
German investor confidence declined for a third consecutive month in June amid uncertainty over the Greek debt default. The ZEW Economic Sentiment Index, covering the economic outlook of about 350 respondents for the six months ahead, dropped to 31.5 in the reported month, down from May when the reading came in at 41.9 points. That was the lowest level since November 2014. In addition to that, the Current Situation Indicator came in at 62.9 in the reported month, declining from May's 65.7 and compared with analysts' forecast of 63 points. While the Bundesbank has revised its economic growth outlook for Germany on the back of surging consumer optimism, the Euro zone is blighted by Greece's failure to reach a deal with its international creditors to unlock bailout funds. The German central bank expected a 1.7% growth in 2015, compared with the 1% expansion it estimated in December. Investor sentiment was also affected by a correction in bond markets that saw yields for German 10-year bunds rise from almost zero in April to around 1% this month. A separate report showed that the annual gauge of inflation in Germany rebounded in May, growing for the fourth consecutive month. The German CPI gained 0.7% year-on-year in May, compared to the 0.5% pace of growth seen in April, according to Destatis. On a monthly basis, the CPI added 0.1%, following no growth seen a month before.
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