Investor sentiment in Germany dropped sharply in February as the effects of the coronavirus outbreak weighed on exporters, a survey revealed, adding to an increasingly gloomy picture for Europe’s biggest economy.
The Zew survey of financial market experts found that sentiment about the outlook for the German economy fell 18 points this month to a reading of 8.7. This is well below January’s score of 26.7 and significantly worse than the 21.5 economists in a Reuters poll had been expecting.
“The feared negative effects of the coronavirus epidemic in China on world trade have been causing a considerable decline of the Zew Indicator of Economic Sentiment for Germany,” said Achim Wambach, Zew president.
“Expectations regarding the development of the export-intensive sectors of the economy have dropped particularly sharply,” he added. “Besides, the end of 2019 and the beginning of 2020 saw a worse than expected development of the German economy.”
The knock to sentiment follows a spate of bad news for the economy. Germany’s manufacturing sector suffered its worst year for a decade last year, following a sharp fall in orders in December.
The German economy flatlined in the fourth quarter, figures last week showed, producing zero growth.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the data from the Zew survey provided the “first clear sign of a hit” from the coronavirus to investor sentiment in the eurozone.
The Sentix February survey of German investors, published last week, fell because of the effects of the outbreak, but the drop in that case was not as bad as economists had anticipated. Mr Vistesen said respondents to that survey had likely not had time to incorporate the risks fully.
The Zew survey found investors’ views on the current state of the Germany economy had worsened, with a reading of minus 15.7, down from minus 9.5 in January and worse than the minus 10.3 economists had anticipated.
