Germany is the fourth largest nation in the world, and the heart of Europe’s economy. Concern about the future of its economy were posted in the latest version of economic sentiment, another wound to hope of a large recovery that would lift global gross domestic product (GDP) to high and sustainable levels.
According to new data released by a large Germany government agency:
The ZEW Indicator of Economic Sentiment for Germany declines in May 2015. Decreasing by 11.4 points compared to the previous month, the index now stands at 41.9 points (long-term average: 24.9 points). “Financial market experts have adjusted their optimistic expectations downward in May due to unexpectedly poor growth figures in the first quarter of 2015 and turmoil on the stock and bond markets. However, only a small number of survey participants actually expect a deterioration of the economic situation,” says ZEW President Professor Clemens Fuest.
It is impossible to spin the news as anything but dismal, particularly since it is such a large decline from the previous month.
The data confirm recent downgrades of global economic growth made by both the International Monetary Fund and World Bank. The pessimism includes the staggered improvement of the three economies larger than Germany. Japan has been frozen in a near-recession state for years, and help from the Bank of Japan has not changed that. U.S. GDP barely grew in the first quarter, which caused many experts to cut their forecasts for growth later this year. And China’s economy is no longer white hot. Its government has revised its 2015 GDP forecast to 7%. Many outside experts claim the number is too high because consumer spending has been less than forecast and exports have been hit by economic growth among its largest trading partners.
Germany’s sentiment measures are a confirmation of what many economists fear.
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