Breaking: German ZEW index plunges to six year low amid trade war fears

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The German ZEW business confidence index has again dropped sharply in April, amid growing investor concerns about the threat of a trade war with the US and the impact of Western military intervention in Syria.

The six month economic forecast, based on a survey among more than 200 analysts and institutional investors in Germany, fell by -13.3 basis points compared to the previous months and now hits negative territory at -8.2 basis points. The sharp fall in April follows a similar downward trend in March, when the outlook index fell by -12.7 basis points.

At the same time, investors’ assessment of the current situation in Germany is significantly less dramatic, with the index declining gradually from -1.6 basis points last month to -2.8 basis points in April, it is still at +87.9 basis points, highlighting a growing divergence among between cautious optimism about the current situation and growing fears of the future.

“The drop in business confidence is largely due to the trade war with the US as well as the current situation in Syria. Another factor is the clear decline in production, export and retail sales figures in the first quarter of 2018, which also had a detrimental effect on investors’ expectations” comments ZEW president Achim Wambach.

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