The investor outlook for Germany’s economy improved to its highest level since Russia’s invasion of Ukraine — the latest sign that concerns over a deep winter slump are receding.
(Bloomberg) — The investor outlook for Germany’s economy improved to its highest level since Russia’s invasion of Ukraine — the latest sign that concerns over a deep winter slump are receding.
The ZEW institute’s gauge of expectations climbed to -23.3 in December from -36.7 the previous month, better than economists polled by Bloomberg had predicted. It’s still below a long-term average, though, as consumers and industry grapple with higher energy costs.
An index of current conditions edged higher.
“The vast majority of financial-market experts expect the inflation rate to decline in the coming months,” ZEW President Achim Wambach said Tuesday in a statement. “Together with the temporary stabilization on the energy markets, this leads to a significant improvement in the economic outlook.”
The risk of natural gas shortages in Europe’s largest economy has receded thanks to lower energy use and storage facilities that were completely filled heading into the colder weather. Companies’ pessimism on the coming months has fallen sharply and the downturn may be less severe than many had expected, the Ifo institute said last month.
Analysts surveyed by Bloomberg still see Germany slipping into recession before growth resumes in the second quarter of 2023. Demand is under pressure as households brace for higher energy bills as a result of Russia’s war — despite wide-ranging government measures to cushion the blow.
Inflation in Germany slowed last month, final data earlier Tuesday confirmed, but at 11.3% remains more than five times the European Central Bank’s target. Officials meeting this week are expected to extend their most aggressive monetary-tightening push ever by raising borrowing costs further.
–With assistance from Harumi Ichikura and Kristian Siedenburg.
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