German investor confidence improves

German investor confidence has increased unexpectedly during this month as a result of the interest rate cuts and the action that has been taken by the government, as well as state interventions across the euro zone and in Asia that have bolstered forecasts, although it remains below the historical average.

The ZEW Indicator of Economic Sentiment improved by 9.5 points in November to minus 53.5 points, although it reached minus 63.9 in July, which is the lowest on record (the historical average is plus 27.1 points).

Even though the German economy has weathered the storm better than most euro zone economies, it has still continued to falter.

The International Monetary Fund said the economy of the 15 nations sharing the euro will shrink 0.5 percent in 2009, and that confidence will continue to fall and investors and businesses are having to become risk averse in order to survive the current economic crisis.

Germany’s benchmark DAX share index has dropped 37 percent this year and it is argued by many economists that the full impact of the credit crisis has yet to be felt in Germany.

The European Commission said earlier in the month that the euro zone economy entered a recession in the third quarter and growth will continue to be stunted in 2009.

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