Boost to economic sentiment in Germany and EU for November - ZEW

Author: Morgan Condon

2019/11/12

LONDON (ICIS)--Economic sentiment in Germany improved substantially in November, according to economic research group Zew on Tuesday.

The indicator jumped 20.7 points on the previous month. Despite this significant increase, the reading is still negative at -2.1 points.

This feeling has been echoed for economic development in the eurozone, optimism on which climbed to -1.0 points in November from -23.5 in October.

Expectations of inflation developments in the euro area have also risen significantly, with the indicator for inflation now stands at 12.2 points, gaining 11.2 points on last month.

Positive sentiment has been attributed to the increased potential for international economic policy to improve, and smoother Brexit negotiations between the UK and the EU.

ZEW President Professor Achim Wambach said, “The chances for an agreement between Great Britain and the EU and thus for a regulated withdrawal of Great Britain have noticeably increased. Punitive tariffs on car imports from the EU to the United States are also less likely than the projections a few weeks ago. An agreement in the trade conflict between the USA and China is appearing more likely too.”

Researchers at Oxford Economics present a mixed picture of how the global economy will develop throughout 2020.

While stating that the risk of a global GDP slowdown remains high, in the nearer term household spending is expected to remain resilient in advanced economies.

The minor slowdown in employment growth is credited as keeping consumer spending buoyant, and the continuation of this could prevent GDP contracting.

“The resilience of the global economy to a further substantial growth slowdown will to a large degree rely on consumers continuing to spend, particularly in advanced economies. A feature of global recessions is a sharp slowdown in household spending, albeit outright contractions in spending are often avoided,” said analysts at Oxford Economics.

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