German investor confidence fell sharply this month to far weaker levels than expected, presaging a slowing of the economic upturn in Europe's largest economy in the medium term, the ZEW research institute said today.
The Mannheim-based think tank said today its expectations indicator, based on a survey of 300 analysts and institutional investors, dropped to 20.1, its lowest level since December, from 36.3 in March.
ZEW research institute report
The mid-range forecast of 35 economists polled by Reuters last week was for a decline to 32.8, below the indicator's long-term average of around 34.5.
"This strong decline is partly explained by disappointing incoming (manufacturing) orders which failed to sustain hopes of a sustained recovery in economic activity in Germany," the institute said in its report entitled "Pessimism Returns".
"In conjunction with a slackening off in global economic activity, the pace of the economic upturn in Germany is expected to slow in the medium term," it added.
The euro fell to session lows against the dollar after the ZEW report was published. Europe's common currency hit the day's lows against the dollar at $1.2982 before recovering.
The International Monetary Fund said earlier this month that global economic growth would slow to 4.3 per cent this year, although oil prices are a growing risk to the outlook.
