German analyst and investor sentiment fell in August to its lowest level since April 2009 on concerns that a global economic slowdown will hit Europe's largest economy, a closely watched survey showed today.
The Mannheim-based ZEW economic think tank's monthly poll of economic sentiment fell to 14.0 from 21.2 in July, declining for the fourth month in a row. The reading was well below the consensus forecast in a Reuters poll for a slight drop to 21.0.
The euro briefly pared gains against the dollar after the release of the data.
"August's drop ... will dent hopes that the strong recovery seen in Q2 could continue," said Jennifer McKeown at Capital Economics.
The reading followed news on Friday that the German economy grew by 2.2 per cent in the second quarter - the fastest quarterly expansion since reunification.
ZEW economist Peter Westerheide said even if the economy stagnated for the remainder of this year, it would still post growth of about 3 per cent compared to 2009.
A separate ZEW gauge of current conditions rose to 44.3 from 14.6 in July, surpassing all forecasts. The ZEW said the increase was the strongest in the history of the indicator.
But the drop in expectations pointed to slower growth ahead.
"The decline in expectations ... highlights the shaky ground that the recovery is on," Mr McKeown said. "German GDP should post a very healthy expansion of at least 3 percent this year thanks to a surge in exports.
"But as global demand growth slows further and consumers remain reluctant to spend, the recovery is likely to be fairly short lived," she added. The index was based on a survey of 284 analysts and investors and conducted between July 26th and August 16th, ZEW said.
Reuters