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German investor morale surges as economy grows, Trump angst fades
April 11, 2017 / 10:52 AM / 7 months ago

German investor morale surges as economy grows, Trump angst fades

BERLIN (Reuters) - German investor morale brightened in April to its highest level since August 2015, buoyed by a strong first quarter for Europe’s largest economy and fading concerns about protectionism taking hold under U.S. President Donald Trump.

An illustration picture shows a one euro coin, April 8, 2017. REUTERS/Kai Pfaffenbach

Mannheim-based ZEW said on Tuesday its monthly economic sentiment index surged to 19.5 points from 12.8 in March. That compared to the Reuters consensus forecast for a rise to 14.0.

“Donald Trump is losing his scariness and in the euro zone there is now a sense of optimism breaking through,” said Thomas Gitzel at VP Bank.

Trump has threatened to hit German carmakers with a border tax of 35 percent, arguing that such a step would make them create more jobs on American soil.

But German industry has enjoyed what the government last week called an “extraordinary” start to the year, as the economy’s engine room fires on all cylinders to satisfy demand at home and abroad.

In March, German business morale hit its highest level in nearly six years.

ZEW President Achim Wambach said in a statement investors were encouraged by the German economy’s robust first quarter, adding: “The financial market experts expect this positive development to continue.”

Official figures released last Friday showed German industrial output surged in February and the trade surplus swelled.

The ZEW survey is the latest in a batch of strong German economic indicators, helping Chancellor Angela Merkel burnish her economic credentials before federal elections on Sept. 24, when she will seek a fourth term.

German firms appear unfazed by “America First” protectionist rhetoric in Washington, European politics and even Germany’s own election cycle. Merkel’s conservatives lead in polls, though the formation of the next government is unclear.

A separate ZEW gauge measuring investors’ assessment of the economy’s current conditions rose to 80.1 points from 77.3 in March. This compared with the Reuters consensus forecast of 77.7.

“The robust current conditions component allows for hope for a continuation in the second quarter of the economy’s pleasing performance,” said Viola Julien at Helaba.

Earlier, sources familiar with new projections due to be released on Wednesday said Germany’s leading economic institutes have raised their forecasts for economic growth to 1.5 percent from 1.4 percent in 2017, and to 1.8 percent in 2018.

In 2016, the economy grew by 1.9 percent, the strongest rate in five years.

Additional reporting by Rene Wagner; Editing by Victoria Bryan and John Stonestreet

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