Economy: ZEW index falls for the first time in five months

The economic expectations of German financial experts surprisingly fell by 6.6 points to 28.1 points in October. High energy prices and weak consumption are slowing the hoped-for upswing.

Germany as a business location: Europe's largest economy has recently grown for three quarters in a row. (Symbolic image) Photo: Marijan Murat/dpa

Berlin. Financial experts are taking a more pessimistic view of the German economy for the first time in months. The barometer of economic expectations for the next six months fell by 6.6 points to 28.1 points in October.

This is the first decline after five increases in a row, as the Mannheim Center for European Economic Research (ZEW) announced on Tuesday in its monthly survey of 178 investors and analysts. Economists surveyed by the Reuters news agency had only expected a decline to 30.0 points.

“The German economy is slowly coming out of stagnation, but the upturn is not self-sustaining,” said ZEW President Achim Wambach, commenting on the setback. "Private consumption and private investment remain weak because high energy prices depress real incomes, increase production costs and keep inflation at higher levels for longer."

The stock market traders, on the other hand, assessed the current situation much better: this barometer increased by 11.2 points. However, it remained in negative territory at minus 35.9 points.

Europe's largest economy has recently grown for three quarters in a row, boosted primarily by exports. The federal government and the leading economic research institutes have therefore increased their growth forecast for this year to 1.3 percent, after an increase of only around half a percent was expected in the spring.

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High inflation remains a problem. The Bundesbank expects price pressure to remain high in the coming months. “It can currently be assumed that the inflation rate in Germany will remain noticeably elevated into next year,” says the current monthly report.

Returning to the targeted two percent mark will “take some time.” Record high prices for gasoline and diesel as well as expensive heating oil caused consumer prices to rise by 3.3 percent in September, the highest in almost three years.