Germany's economic confidence strengthened sharply to a 10-month high in June, weathering the risks of a possible 'Brexit', survey results from the Centre for European Economic Research or ZEW, showed Tuesday.
The economic sentiment index rose to 19.2 from 6.4 in the previous month, while it was forecast to fall to 4.8 points. This was the highest reading since last August, when the score was 25.0.
Likewise, the current situation index gained 1.4 points to reach a five-month high of 54.5 in June. The expected score was 53.0.
Against the background of latest market turmoil and the upcoming British referendum, German investors' new optimism comes as a nice positive surprise, ING Bank NV Chief Economist Carsten Brzeski said.
"The improvement of economic sentiment indicates that the financial market experts have confidence in the resilience of the German economy," ZEW President Achim Wambach said.
"However, general economic conditions remain challenging. Apart from the weak global economic dynamics, it is mainly the EU referendum in Great Britain which causes uncertainty."
Jennifer McKeown at Capital Economics said the ZEW survey suggests that investor sentiment towards the German economy has not been hit by the risk of "Brexit" so far and points to steady annual GDP growth.
With or without "Brexit", the economist thinks that more monetary policy support will ultimately be needed in the Eurozone.
Financial market experts' sentiment concerning the economic development of the euro area also improved in June.
The indicator of economic sentiment for the Eurozone climbed 3.4 points to a reading of 20.2 points. Meanwhile, the indicator for the current situation dropped 0.8 points to minus 10.0 points.
by RTT Staff Writer
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