April 16, 2019 / 10:09 AM / 3 days ago

World economy, Brexit delay boost German investor morale

BERLIN (Reuters) - German investor morale improved for the sixth month in a row due to a resilient global economy and a delay to Britain’s departure from the EU, a survey showed on Tuesday, but the growth outlook for Europe’s largest economy remains clouded by external risks.

FILE PHOTO: General view inside of shopping mall 'Pasing Arcaden' in Munich, Germany August 18, 2016. REUTERS/Michaela Rehle

The German government is expected to slash its 2019 growth forecast later this week as exporters struggle with weaker demand from abroad, trade tensions triggered by U.S. President Donald Trump’s “America First” policies and Brexit uncertainty.

ZEW President Achim Wambach said the slight improvement in economic sentiment was largely based on the hope that the global economy would develop less poorly than previously assumed.

“The postponement of the Brexit deadline may also have contributed to buoy the economic outlook,” Wambach said.

The ZEW research institute said its monthly survey showed economic sentiment among investors improved to 3.1 from -3.6 in March. Economists had expected a smaller increase to 0.8.

A separate gauge measuring investors’ assessment of the economy’s current conditions fell to 5.5 from 11.0 in the previous month. Markets had predicted a dip to 8.0.

Recent German data has painted a mixed picture of the economy. Industrial orders tumbled and manufacturing output stagnated in February while construction boomed and retail sales rose more than expected in the same month.

Chancellor Angela Merkel’s government will update its growth forecasts for this year and next on Wednesday.

A government source told Reuters on Friday that Economy Minister Peter Altmaier will halve the estimate for 2019 to 0.5 percent, lower than a recent estimate of 0.8 percent by Germany’s leading economic institutes. The government’s last forecast in January was for 1 percent growth in 2019.

Bundesbank President Jens Weidmann and Finance Minister Olaf Scholz both said at the sidelines of the International Monetary Fund and World Bank spring meetings in Washington last Friday that they expected the economy to rebound after its soft patch.

Reporting by Michael Nienaber, editing by Ed Osmond

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