German investor morale brightens unexpectedly in January

FILE PHOTO: A steel-worker is pictured at a furnace at the plant of German steel company Salzgitter AG in Salzgitter, Lower Saxony on March 17, 2015. REUTERS/Fabian Bimmer/File Photo

BERLIN (Reuters) – The mood among German investors improved for the third consecutive month in January, a survey unexpectedly showed on Tuesday, suggesting that the growth prospects of Europe’s largest economy are slowly brightening despite numerous risks from abroad.

Weaker growth in emerging markets, trade disputes driven by U.S. President Donald Trump’s ‘America First’ policies and the possibility that Britain will leave the European Union without a deal in March are putting the brakes on a nine-year expansion.

The ZEW research institute said its monthly survey showed economic sentiment among investors rose to -15.0 from -17.5 in December. This compared with the Reuters consensus forecast of -18.4.

A separate gauge measuring investors’ assessment of the economy’s current conditions fell to 27.6 from 45.3 in the previous month. The Reuters forecast was 43.5.

“It is remarkable that the ZEW Economic Sentiment for Germany has not deteriorated further given the large number of global economic risks,” ZEW President Achim Wambach said.

Wambach said that investors had already considerably lowered their expectations for economic growth in the past months.

“New, potentially negative factors such as the rejection of the Brexit deal by the British House of Commons and the relatively weak growth in China in the last quarter of 2018 have thus already been anticipated,” he added.

The German economy grew by 1.5 percent in 2018, the weakest rate in five years and markedly slower than the previous year, data showed last week, as exporters are hit by U.S. trade disputes and the car industry struggles to adjust to stricter pollution standards.

The government will update its 2019 economic growth forecast next week. In October, the economy ministry had predicted gross domestic product would expand by 1.8 percent this year. The Ifo institute last month reduced its forecast to 1.1 percent.

Reporting by Michael Nienaber; editing by Thomas Seythal