(Bloomberg) -- Investor confidence in Germany’s economy worsened for the first time in a year as industry fails to match a gradual recovery in other sectors.
A barometer of expectations compiled by the ZEW institute fell to 41.8 in July from 47.5 in June, data released Tuesday showed. That was slightly higher than the 41 forecast in a Bloomberg survey. A measure of current conditions unexpectedly improved.
“The economic outlook is worsening,” ZEW President Achim Wambach said in a statement. “The fact that German exports decreased more than expected in May, the political uncertainty in France and the lack of clarity regarding the future monetary policy by the ECB have contributed to this development.”
While Europe’s biggest economy is “regaining its footing,” according to the Bundesbank, the turnaround will be slow: It predicts growth of just 0.3% this year. Behind the sluggish performance is the lingering malaise among manufacturers, with figures for industrial production and factory orders both disappointing of late.
Bloomberg Economics reckons German industry may have suffered a permanent hit. Half of an estimated 7% shortfall in productive capacity is structural, it said in a recent report — suggesting a full revival from almost two years of stagnation will be hard to achieve.
Adding to the bleaker outlook, the Hans-Böckler-Foundation’s Macroeconomic Policy Institute said Monday that its recession-risk indicator rose for the first time since the start of 2025, though it stressed that a downturn isn’t imminent.
--With assistance from Kristian Siedenburg, Joel Rinneby and Alexander Weber.
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