FRANKFURT MAIN: Confidence among investors in Germany surged in June to its highest level since before the financial crisis, a closely-watched survey showed on Tuesday, as Europe’s top economy emerges from a virus lockdown.

The ZEW institute’s monthly barometer added 12.4 points to 63.4 in June, the same level as in March 2006, as “confidence grows that the growth trough will pass in summer,” ZEW chief Achim Wambach said.

But Wambach noted that “revenue expectations remain very different for different sectors,” with pessimism for export-oriented car and machine-tool makers and financial firms while IT, ­telecoms and services enjoy a more ­positive outlook.

The arrival of the coronavirus in Europe and government-imposed lockdowns to control its spread sent the ZEW’s index of investors’ expectations for the coming months plunging into negative territory. A rebound was already visible in April as Germany appeared to weather the storm more ably than EU neighbours like France and Italy.

Financial players’ assessment of the present situation in Germany remained deep in negative territory at -83.1 points in June, an improvement of 10.4 over the reading for May.

Turning to the ZEW’s confidence barometer for the wider eurozone, investors’ assessment of the current situation showed a more modest improvement, while the six-month outlook picked up at a similar pace to Germany.

The high reading in June for Germany alone suggests “the worst could be over” for Europe’s biggest economy, ING bank analyst Carsten Brzeski commented.

Activity is restarting and Berlin has offered lavish support to firms and workers, meaning “the rebound of the economy should continue well into the second half of the year,” Brzeski said.

Published in Dawn, June 17th, 2020