ZEW Economic Sentiment Index January 2008

Investor confidence in Germany fell to its lowest lowest level in 15 years in January, indicating the growing concern that a recession in the United States will only serve to deepen the growing slowdown in what is Europe's largest economy. The ZEW Center for European Economic Research said its index of investor and analyst expectations fell to minus 41.6 from minus 37.2 last month, the eighth straight month of decline.




Today we also learnt from the Federal Statistics Office that German economic growth slowed to 2.5 percent in 2007 from 2.9 percent in 2006. At the present moment the Bundesbank is predicting growth of some 1.9 percent this year, but it is evident that the number of downside risks to this forcast are now growing almost by the day.

German industrial production, exports and retail sales all declined in November, suggesting the economy is gradually losing momentum as a stronger euro makes exports less competitive even as the global economy slows, and record oil and food prices drive up inflation. Higher credit costs will may also restrain company investmen. The Munich based Ifo institute said in December that it expects company spending on equipment to grow about 4 percent in 2008 after increasing by 9.2 percent in 2007.