February 18, 2020 / 10:31 AM / 6 months ago

UPDATE 1-German investor morale worsens on coronavirus fears - ZEW

(Adds quote, context)

BERLIN, Feb 18 (Reuters) - The mood among German investors deteriorated far more than expected in February on worries that China’s coronavirus outbreak would dampen world trade and deepen a manufacturing recession in Germany, a survey showed on Tuesday.

The ZEW research institute said its monthly survey showed economic sentiment among investors fell to 8.7 from 26.7 in January. Economists had expected a drop to 21.5.

The survey adds to expectations that Europe’s biggest economy will continue to lose momentum in the first half of 2020 as its manufacturers linger in a recession prompted by a reduction in exports.

“The feared negative effects of the coronavirus epidemic in China on world trade have been causing a considerable decline of the indicator of economic sentiment for Germany,” said ZEW President Achim Wambach.

“Expectations regarding the development of the export-intensive sectors of the economy have dropped particularly sharply,” he added.

A separate gauge measuring investors’ assessment of the economy’s current conditions decreased to -15.7 from -9.5. Analysts had forecast a reading of -10.3.

The German economy stagnated in the fourth quarter due to weaker private consumption and state spending, renewing fears of a recession.

“The end of 2019 and the beginning of 2020 saw a worse-than-expected development of the German economy,” said Wambach. adding that “economic development is rather fragile at the moment.”

Some economists fear the coronavirus, which started in China and is impacting both the global supply chain and demand from China, could result in weaker German growth in the first quarter of this year. (Reporting by Joseph Nasr Editing by Michelle Martin)

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