ZEW survey: German economy worse than believed
THE TAKEAWAY: German ZEW survey forecasts worse economic condition than expected -> investor confidence hits 3-year low -> Euro drops to daily low.
German ZEW survey numbers for October released today showed significant diminishments in economic sentiment. Investor confidence fell to -48.3 versus last month’s -43.3 and the expected -45.0; the figure was the lowest since November 2008. The current situation survey number was also lower than expected, at 38.4 versus 40.0.
Significantly, the ZEW report warned of a mild recession, a sharp contrast to the joint report released by major economic institutions last week which predicted that a recession can be avoided. ZEW’s economist Schroeder said that the numbers already point to a recession, and that he expects negative growth over the next two quarters which would technically constitute a recession. Schroeder blamed the low survey numbers on uncertainty regarding the EMU crisis which threatens to swallow the Eurozone in an unprecedented credit crisis, should plans to avoid a Greek default fall through.
The Euro hit a daily low following the survey’s release and is now trading just slightly above that number, in the context of a downside extension which began when the market topped out two days ago.
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