In May, German analyst and investor confidence hit its lowest point since January 2013. Growing anxiety concerning the slowdown of economic growth in Europe's largest economy lead to the fifth consecutive month of decline, Reuters reports.
Mannheim-based think tank ZEW undertakes a monthly survey of economic sentiment in the country. The survey, which reported 43.2 in April, fell to 33.1 this month, well below expert projections.
"Data later this week are likely to reveal that the German economy made a strong start to the year, perhaps expanding by a quarterly 0.7 percent or so. But today's survey broadly supports our view that this pace of growth is unlikely to be sustained," explained Jessica Hinds, economist at Capital Economics to Reuters.
The shake-up in investor confidence reflects Germany's concern that the slow recovery of the euro leaves it vulnerable to shocks and market fluctuations. The results of the report sent the euro to a one month low against the dollar. A report from the economy ministry claimed that the mild winter contributed to robust performance in the first quarter, but might also cause the spring economic uptick to be weaker than usual.
Bloomberg Businessweek also added that Russia's decision to seize Crimea from Ukraine and the prospect of civil war has many economists nervous for the future of the region. A ZEW economist said it was unclear how far geopolitical risks had contributed to the headline indicator's decline but some economists suggested it played a role.
With investors expressing reservations about broader economic conditions, companies will need to implement robust risk management solutions in their day-to-day operations to demonstrate that they are being proactive about maximizing returns for shareholders.
