German investors see light at end of ‘very long tunnel’ – ZEW

(C) Reuters.

BERLIN (Reuters) – The mood among German investors improved in April as concerns about the impact of the coronavirus pandemic on Europe’s largest economy seemed to have eased, a survey showed on Tuesday.

German carmakers have restarted production at some factories this week after the country eased restrictions designed to contain the coronavirus outbreak. Certain shops are now allowed to open, but strict social distancing rules remain in place.

The ZEW research institute said its monthly survey showed economic sentiment among investors rose to 28.2 from -49.5 in March. Economists had expected a much smaller improvement to -42.3.

“The financial market experts are beginning to see light at the end of a very long tunnel,” ZEW President Achim Wambach said in a statement.

A separate gauge measuring investors’ assessment of the economy’s current conditions fell to -91.5 from -43.1 in the previous month. Analysts had forecast a smaller drop to -77.5.

The survey, which was conducted among more than 200 analysts between April 7-20, showed that investors did not expect economic growth to turn positive until the third quarter.

“Economic output is not expected to return to pre-corona levels before 2022,” Wambach said.

Commerzbank (DE:CBKG) economist Ralph Solveen said one should not read too much into the surprisingly strong improvement of economic sentiment as the indicator only showed that, given the current catastrophic situation, many analysts expected a certain improvement or at least no deterioration in the next six months.

“The index says nothing about the speed and extent of the recent slump or the extent of a recovery,” Solveen added.

Thomas Gitzel from VP Bank said the survey showed a certain form of calculated optimism among investors as things could barely get any worse. “After the huge drop in the previous month, the motto now is: It can only get better,” Gitzel said.