- Clemens Fuest, President at ZEW
Ongoing geopolitical concerns and an impact of economic sanctions imposed on Russia continue to weigh on German investors mood. The ZEW Center for European Economic Research showed that business sentiment has been heading down for the ninth month in a row, fuelling concerns over the Euro zone's largest economy. The ZEW Economic Sentiment Index, which designed to measure the economic outlook of about 350 respondents in Germany for the six months ahead, dropped to 6.9 points in September, down from August's 8.6 points. Analysts, however, expected a 5-point result. A separate index tracking current conditions plummeted to 25.4 points from 44.3 in August, strongly against forecast of 40.0 points for August. The report highlighted the drop in economic sentiment was likely due to the impact of ongoing geopolitical tensions on the German economy. Recent economic data has shown that sanctions on Russia as a result of the conflict in Ukraine are hitting the German economy. Germany is Russia's largest trading partner in Europe.
Nevertheless, the interest rate cut from the European Central Bank with the launch of the asset purchase programme, which resulted in the Euro's weakening, all should have a positive offsetting impact on businesses sentiment.
© Dukascopy Bank SA