German investor confidence brightens

German investor confidence brightens

By Ralph Atkins in Frankfurt

Published: February 12 2008 14:07 | Last updated: February 12 2008 14:07

German investor confidence has brightened this month, according to a survey that could help dispel gloom about the outlook for Europe’s largest economy.

The Mannheim-based ZEW institute said its economic sentiment indicator had risen for the first time since May last year. But at minus 39.5 points in February, after minus 41.6 points in January, it remained significantly below its historical average and still lower than last December.

Results of the ZEW survey, which covers expectations for the next six months, have been significantly gloomier in recent months than other indicators – and have clashed with the still-upbeat mood among the country’s manufacturers. The latest rebound pointed to a “cautious recovery” by mid-year, ZEW said.

“Banks are currently in the doldrums but the financial experts expect that the worst will be over in six months,” said Wolfgang Franz, ZEW president.

Nevertheless, analysts cautioned that the ZEW index might still be exaggerating the extent of Germany’s economic slowdown. “Although downside risks have undoubtedly increased further, the chances of a recession remain rather low,” said Alexander Koch, economist at Unicredit in Munich.