LONDON (ICIS)--German investor confidence weakened in June as sluggish economic demand and fears over the new Italian government exacerbated global trade tensions to drive business outlook to its lowest ebb in nearly six years, research group ZEW said on Tuesday.
The agency’s metric of German economic sentiment slipped by 7.9 points in June compared to the previous month to stand at minus 16.1 points, compared to a long-term average of 23.3 points, the most bearish score since September 2012.
Investor confidence has slumped in the country in recent months compared to the record high seen in January this year, as the momentum of eurozone economic growth has sputtered and geopolitical tensions have intensified.
ZEW’s investor confidence index had remained at minus 8.2 points in April and May, a deeper slump than in the upheaval following the UK’s Brexit vote in mid-2016.
The escalation of a potential trade dispute between the US and the EU and fears of the implications of an electoral upset in Italy soured outlook further, exacerbated by economic data pointing to weaker-than-expected exports, production and orders for German businesses in April, according to ZEW president Achim Wambach.
“The recent escalation in the trade dispute with the US as well as fears over the new Italian government pursuing a policy which potentially destabilises the financial markets have left their mark on the economic outlook for Germany,” said Wambach.
Expectations for the current and near-term economic development of the eurozone were even worse-hit, falling by double-digit levels month on month as a result of concern over the implications for Europe's financial markets of an Italian populist, eurosceptic coalition taking office, ZEW added.