German Confidence Perks Up

Investor confidence in Germany is beginning to perk up, a new poll showed Tuesday, on hopes that a fall of the euro will take the heat off exporters and a change in government will lead the euro zone's biggest economy out of its current doldrums. But while the tentative brightening of prospects came as a welcome piece of good news, resurgent oil prices constitute an underlying risk to sentiment in the coming months. And there is no guarantee that a different government will really be better able to cure Germany's economic woes, analysts said. The ZEW economic research institute's economic expectations index, the second most important confidence barometer in Germany after the widely watched Ifo business climate index, rose by 5.6 points to plus 19.5 points in June, the think-tank said in a statement. The increase was better than expected: analysts had been penciling in a more modest rise in the index to around 17.3 points this month. "The reason the sharp rise in economic expectations is, in addition to the tangible decline in the euro exchange rate, the hope that following the autumn elections that necessary reforms will be implemented more energetically," ZEW President Wolfgang Franz explained. "The outlook is beginning to brighten. The country needs stable majorities in order to press ahead with overdue, if unpopular reforms. We can't afford any further delays," Franz said. The ZEW indicator, which this month was based on responses from 315 financial analysts and institutional investors, represents the balance between positive and negative expectations for the economy over the next six months.