According to the ZEW Centre for Economic Research in Mannheim the benchmark index of investor sentiment fell to 36.3 points in April from the 48.5 figure recorded in March. Economists had been expecting a reading of 42. The index of current conditions also fell to 9.2 from 13.6 with 81% of respondents to the survey expecting no change in short-term interest rates over the next six-months.
“Basically, the surveyed financial market experts remain confident, but are less optimistic than they have been in the previous month. The decline in economic sentiment is consistent with the release of economic data that fell short of expectations”, said ZEW President Dr. Clemens Fuest in the release. “German exports into the Eurozone as well as the rest of the world have declined, for instance. The debt crisis in the Eurozone is still unresolved and causes uncertainty.”
Fuest added, “There is increasing evidence that there are growth risks, there has been some disappointing data coming from China, from US labour markets and from German exports. There have been some doubts about the strength of the recovery and some people think there is now confirmation of that.”
Other data showed that inflation eased across the Eurozone in March after being spurred on by a downward trend in energy prices. The regions annual inflation figure fell to 1.7% in March, its lowest level since August 2010 coming close to the European Central Banks target of 2%.
The disappointing confidence data has raised concerns that the Euro crisis has finally begun to spread into the very heart of the single currency region. Economist Nouriel Roubinin warned via Twitter that “Zew survey of Germany confidence index plunges in April, now consistent with Ifo and PMI signals. Euro zone malaise is now spreading to the core.”
Easing inflation and the weak economy could provide extra motivation for European central bankers to consider lowering rates when they meet on May 2, with some economists citing the bloc’s rigid inflation target as hampering a return to economic expansion after three years of debt crisis.
As of 12:30 pm GMT
The Euro to Pound Sterling exchange rate is currently trading in the region of 0.8569
The Euro to US Dollar exchange rate is currently trading in the region of 1.3116
The Euro to Australian Dollar exchange rate is currently trading in the region of 1.2650
The Euro to New Zealand Dollar exchange rate is currently trading in the region of 1.5474