German investor confidence sags in August

AP News
Posted: Aug 23, 2011 7:36 AM
German investor confidence sags in August

German investor confidence fell sharply in August on fears about sagging growth in Europe's biggest economy, the region's government debt crisis and the possibility of another recession in the United States.

The ZEW institute said Tuesday that its index of investor confidence dropped to minus 37.6, down 22.5 points from the month before.

The institute said the drop was due to fears about a double-dip recession in the United States and uncertainty about the global economy, coupled with Germany's disappointing second-quarter growth of 0.1 percent reported last week.

"The already expressed skepticism among financial experts regarding future economic growth has strengthened dramatically," said ZEW President Wolfgang Franz. "Expectations are moreover consonant with the economic pessimism on equity markets."

Germany's economy had been growing strongly despite the turmoil in the eurozone over too much government debt in some countries. Greece, Ireland and Portugal have needed international bailouts and there are fears Italy and Spain may have trouble paying their debts as well.

The slump in German growth in the second quarter came as a surprise after strong second quarter results for major companies such as automakers Volkswagen, BWM and Daimler. Economists say German industrial firms still have large order backlogs to work off that will support growth figures in the third quarter.

The index is based on a survey of 286 analysts and financial experts between Aug. 8 and Monday.