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19 May 2015
German ZEW index drops in May, but economy outlook still positive – ING
FXStreet (Barcelona) - Carsten Brzeski of ING, reviews the German ZEW index data release and further comments on the economic outlook, maintaining a positive stance on German growth.
Key Quotes
“Today’s ZEW index shows that German investors have lost parts of their earlier optimism. In May, the headline index dropped for the second straight month to 41.9, from 53.3 in April. This was the strongest monthly drop since August last year. At the same time, the current assessment component dropped for the first time since October last year and stands now at 65.7, from 70.2 in April. Despite today’s drop, both components remain far above their historical averages.”
“In our view, there are still very few arguments in favour of changing our positive take on the German economy. In fact, even if the external tailwinds have subsided somewhat, they are still there. Just to put latest developments into perspective: compared with their average value of the last 12 months, bond yields are currently still some 20bp lower, the euro some 10% weaker and oil prices almost 30% cheaper. Still sufficient to give the economy a cool breezy boost.”
“Moreover, domestic fundamentals remain sound and particularly consumption should support growth in the coming months.”
Key Quotes
“Today’s ZEW index shows that German investors have lost parts of their earlier optimism. In May, the headline index dropped for the second straight month to 41.9, from 53.3 in April. This was the strongest monthly drop since August last year. At the same time, the current assessment component dropped for the first time since October last year and stands now at 65.7, from 70.2 in April. Despite today’s drop, both components remain far above their historical averages.”
“In our view, there are still very few arguments in favour of changing our positive take on the German economy. In fact, even if the external tailwinds have subsided somewhat, they are still there. Just to put latest developments into perspective: compared with their average value of the last 12 months, bond yields are currently still some 20bp lower, the euro some 10% weaker and oil prices almost 30% cheaper. Still sufficient to give the economy a cool breezy boost.”
“Moreover, domestic fundamentals remain sound and particularly consumption should support growth in the coming months.”