German Investor Confidence Dips in Blow to Turnaround Hopes
Investor confidence in Germany’s economy unexpectedly slipped, damping optimism that the country’s fortunes are finally starting to improve.
An expectations index by the ZEW institute dropped to 38.5 in November from 39.3 in the previous month. Analysts had expected a gain to 41. A measure of current conditions improved.
“The overall mood is characterized by a fall in confidence in the capacity of Germany’s economic policy to tackle the pressing issues,” ZEW President Achim Wambach said in a statement on Tuesday. “Although the investment program is likely to provide economic stimulus, the structural problems continue to exist.”
After two years of contraction and volatile output in 2025, there have been some signs that government plans to spend hundreds of billions of euros on defense and infrastructure are translating into stronger growth. Analysts expect output to rise in the fourth quarter following stagnation in the third.
Other soft indicators had recently offered assurances that such expectations will come to pass. Business confidence jumped to the highest level since 2022 in the Ifo institute’s monthly survey, while a separate poll by S&P Global showed business activity surged in October — driven by the services sector.
Hard data have been less convincing. Industrial production rose less than expected in September, only partially making up for a slide the previous month. Factory orders rose for the first time in five months, but the Economy Ministry warned that the situation remains “fragile.”
Germany’s export-reliant industrial sector is particularly at risk from steeper US tariffs and greater competition from China. Chancellor Friedrich Merz’s coalition still sees growth of 1.3% and 1.4% in 2026 and 2027 — thanks largely to the higher public spending.
The additional expenditure is likely to benefit the wider region, with European Central Bank Governing Council member Boris Vujcic on Tuesday calling it “very good news for everyone in Europe.”
Source : Bloomberg.com
