ZEW index rises again
Mood among stock market professionals is rising – Expert: A mystery
November 14, 2023, 4:53 p.m
The impression is becoming more and more solid that the economic downturn has been reached. The mood among stock market professionals continues to brighten. When it comes to assessing the situation, things can’t go any further downhill.
Stock market professionals are less pessimistic about the prospects for the German economy in November for the fourth month in a row. “This confirms the impression that the economic development in Germany has bottomed out,” commented ZEW President Achim Wambach. Chief economist Alexander Krüger from Hauck Aufhäuser Lamp Privatbank reacted rather skeptically to the data: “Where the increase in expectations suddenly comes from remains a mystery.” Apparently the view is gaining ground that “given the desolate situation, things can only get better in the future,” said Krüger. “The ZEW survey consolidates the prospect of economic performance being stagnant at best for the time being.”
The barometer for assessing the economy in the next six months rose by 10.9 points to plus 9.8 points and is therefore back in positive territory for the first time since April, according to the Mannheim Center for European Economic Research (ZEW) in its survey of 174 analysts and announced to investors. Economists had only expected an increase of plus 5.0 points. At the same time, the assessment of the current situation is stabilizing: this barometer rose minimally by 0.1 points to minus 79.8 points.
More bankruptcies
The German economy shrank by 0.1 percent in the summer and is likely to slip into a temporary – so-called technical – recession with economists expecting weakness in the current quarter. The federal government assumes that Europe’s largest economy will regain its footing next year. Accordingly, there should be growth rates of 1.3 and 1.5 percent in 2024 and 2025.
However, the economy is currently not getting anywhere and is stagnating, according to the Ministry of Economic Affairs’ monthly report. The environment has improved somewhat due to significantly falling inflation rates, rising real incomes and a slightly brighter mood in the economy. However, the weak statistical starting position at the end of the third quarter is putting a strain on the start of the final quarter of 2023.
KfW: The economic downturn has passed
“The economic trend continues to resemble the famous razor’s edge ride between slight growth and declining gross domestic product,” said chief economist Thomas Gitzel from VP Bank. This is also reflected in the significant increase in the number of standard insolvencies filed in October by 22.4 percent compared to the previous year, as the Federal Statistical Office announced in preliminary calculations. However, the professional association of insolvency administrators and trustees in Germany (VID) does not expect a wave of company bankruptcies.
In addition to the ZEW index, the business climate of small and medium-sized companies also improved in October after five declines in a row. This was signaled by the KfW-IFO SME barometer. KfW chief economist Fritzi Köhler-Geib also expressed the view that “the economic downturn has finally bottomed out.”
The ZEW index for the Eurozone showed a mixed picture: a decline in the situation and an increase in expectations. As in Germany, the economy in the euro area shrank slightly by 0.1 percent in the summer compared to the previous quarter, the statistics office Eurostat announced, thereby confirming an initial estimate from the end of October.