Financial News: German Economic Confidence Weakens In January

German Economic Confidence Weakens In January

(RTTNews) - German economic sentiment deteriorated more than expected in January as the economy remained in recession for the second straight year and inflationary pressure rose recently, results of a survey by the think tank ZEW showed Tuesday.

The ZEW Indicator of Economic Sentiment fell to 10.3 from 15.7 in December. The reading was expected to drop moderately to 15.2.

Meanwhile, the assessment of current economic situation improved slightly. The corresponding indicator rose 2.7 to -90.4. The score was seen at -93.1.

"The second consecutive year of recession caused economic expectations in Germany to fall," ZEW President Achim Wambach said. Among other things, the drop in economic sentiment was due to the recently released negative GDP growth figures and increasing inflationary pressure, he added.

Wambach observed that a lack of private household spending and subdued demand in the construction sector continue to stall the German economy. "If these trends continue in the current year, Germany will fall further behind the other countries of the Eurozone," he said.

Moreover, there is greater political uncertainty, driven by a potentially difficult coalition-building process in Germany and the unpredictability of the economic policy pursued by the new Trump administration, Wambach noted.

Financial market experts' confidence on economic development in the euro area was more positive than in December, the survey showed. The index rose one point to 18.0 in January. Meanwhile, the assessment of the current situation gained 1.2 points to -53.8.

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