Investor Morale in Germany Rises

By Miranda Murray

BERLIN (Reuters) – German investor morale rose more than expected in June, according to the ZEW economic research institute. The economic sentiment index increased to 47.5 points from 25.2 points in May.

Analysts polled by Reuters had anticipated a reading of 35.0.

The optimism reflected in the ZEW index aligns with the latest forecasts from four German economic institutes, which anticipate that Europe’s largest economy will grow this year after two years of contraction.

“Confidence is picking up,” said ZEW president Achim Wambach.

Fiscal policy measures announced by the German government, together with the European Central Bank’s recent interest rate cuts, have the potential to end economic stagnation in Germany, Wambach noted.

This month, the German cabinet approved a 46 billion euro ($53 billion) tax relief package aimed at supporting companies and reviving the sluggish economy from this year through 2029.

Germany’s parliament also ratified plans for a significant spending surge in March, establishing a 500 billion euro infrastructure fund and largely lifting defense investment from borrowing limits.

VP Bank analyst Thomas Gitzel emphasized the need for some skepticism regarding these positive results due to Europe’s trade disputes with the United States and Middle Eastern tensions.

“However, it is just as possible that the waves in the Middle East will calm down and the tariff disputes with the U.S. will be resolved. This is precisely why economic hopes remain justified,” Gitzel stated.

The ZEW index measuring current conditions, while still negative, also exceeded expectations in June, rising to -72.0 points from -82.0 points the prior month. The forecast had predicted -75.0 points for June.

Approximately 200 analysts and institutional investors participated in ZEW’s June survey, conducted between June 6 and 16.