Confidence among investors in Germany grew in February, according to figures published on Tuesday, in spite of rising tensions with Russia over Ukraine and lingering supply chain issues.
The ZEW institute’s monthly barometer measuring economic expectations climbed 2.6 points to 54.3 after rising sharply in January by 21.8 points. Investors assessment of the current economic situation also advanced slightly by 2.1 points to -8.1, despite recent disappointing growth figures.
“The economic outlook for Germany improved again in February despite growing economic and political uncertainty,” ZEW president Achim Wambach said in a statement. Grounds for positivity was the expectation amongst investors that “coronavirus-related restrictions would be relaxed”, allowing an economic recovery in the first half of 2022, Wambach said.
Grounds for positivity was the expectation amongst investors that “coronavirus-related restrictions would be relaxed”, allowing an economic recovery in the first half of 2022- ZEW president Achim Wambach
Under a draft government plan, seen by AFP earlier this week, Europe’s largest economy plans to end most restrictions in March, as new infection rates ease.
Investors also expected inflation to decline, though “more slowly and from a higher starting point” than previously anticipated, Wambach said.
Inflation in Germany slowed in January but remained elevated at 4.9 per cent on the back of high energy costs.Peaks in the price of energy have been driven in part by tensions between the West and Russia, which supplies over half of Germany’s natural gas.
Warnings by American officials last week that a Russian invasion of Ukraine could happen “any day” saw the German blue-chip DAX index fall 2.02 per cent on Monday, before recouping some of its losses in trading on Tuesday.
After the German economy shrank in the last quarter of 2021, weighed down by widespread shortages of raw materials and components, the government last month revised down its growth projection for 2022 to 3.6 per cent from 4.1 per cent.
The ZEW survey was conducted between February 7 and 14.