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German Investor Confidence Declines In July, Says Finance Survey

The confidence of German investors dropped in July,

The confidence of German investors dropped in July, according to a finance survey conducted by the Mannheim, Germany-based research organization ZEW Centre for European Economic Research.

The ZEW economic data

A statement released by the research organization indicates that its ZEW Indicator of Economic Sentiment for Germany declined to 16.9 in July, which was 2.7 less than its June reading of 19.6. July was the third consecutive month of dropping values for the index, which has a historical value of plus 24.0. The figure has the objective of predicting what the economy will look like in six months.

"The decline of the economic expectations [concerning] the end of 2012 is flattening out gently. This could possibly be an early sign of an encouraging development in 2013. However, risks should not be underestimated. Besides the weak demand from the Eurozone for German exports, the German economy is also burdened by weakening growth dynamics in other important partner countries," ZEW President Professor Dr. Dr. h.c. mult. Wolfgang Franz.

ZEW's figure for predicting the economic strength of the euro zone dropped by 2.2 to reach 22.3 in July. The index for the current state of the region's economy was 72.9 in July, up 0.3 from the previous reading of 72.6.

Flagging growth in Germany

Data provided by the research institution indicated that the current economic state of Germany has also declined to 21.1 from the prior reading of 33.2. Europe's largest economy expanded at a rate of 0.5 percent during the first three months of the year, but this growth is cooling amid regional austerity measures and declining global demand, according to Bloomberg.

Economist predictions for the ZEW index

The July figure for ZEW's index of investor and analyst expectations is higher than the median forecast of minus 20 that was provided by economists participating in a Bloomberg News survey. The prediction was culled from the input of 38 market experts.

"Germany’s export prospects to Europe are in the doldrums and the U.S. and China cooling doesn’t bode well either," Carsten Brzeski, an economist at ING Group in Brussels, told the media outlet. "A stronger domestic economy can’t offset that, so we are looking at a long period of stagnation, albeit at a high level."