Investors fear growth won’t last, ZEW finds

German investor confidence has fallen sharply this month on concerns that the strong recovery seen recently in Europe's biggest economy will not last, the closely watched ZEW survey showed Tuesday.

Investors fear growth won't last, ZEW finds
Photo: DPA

“The decrease … indicates that the enormous growth observed in the second quarter is unlikely to continue,” the ZEW institute said, with weakening conditions abroad likely to hit exports, Germany’s main growth driver.

The ZEW’s monthly sentiment indicator, based on a survey of 284 analysts and institutional investors, fell 7.2 points to 14.0 points, below the indicator’s historical average of 27.3 points and a much sharper drop than feared.

Last week, data showed that German gross domestic product (GDP) surged in the second quarter at its fastest rate since reunification 20 years ago, with output soaring 2.2 percent compared to the previous three-month period.

This followed figures showing that exports, the backbone of the German economy, rocketed 28.5 percent year-on-year in June to reach €86.5 billion, close to pre-crisis levels.

But Germany appears to be in a league of its own amid increasing signs elsewhere, not least the United States and China, that the rebound seen in recent months may be running out of steam.

The US Federal Reserve warned last week that the recovery in the United States, the world’s biggest economy, would be “more modest” than expected, sending financial markets tumbling worldwide.

“Given that economic growth worldwide is losing momentum, the euphoria about the growth rates in some industries is making financial market experts feel uneasy,” ZEW chief Wolfgang Franz said in a statement.

Jennifer McKeown, European expert at Capital Economics, said the fall in the index would “dent hopes that the strong recovery seen in the second quarter could continue.

“(As) global demand growth slows further and consumers remain reluctant to spend, the recovery is likely to be fairly short-lived,” she said.

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‘We agree to disagree’: Still no progress in marathon SAS strike talks

By lunchtime on Friday, talks between the Scandinavian airline SAS and unions representing striking pilots were still stuck on "difficult issues".

'We agree to disagree': Still no progress in marathon SAS strike talks

“We agree that we disagree,” Roger Klokset, from the Norwegian pilots’ union, said at lunchtime outside the headquarters of the Confederation of Swedish Enterprise in Stockholm, where talks are taking place. “We are still working to find a solution, and so long as there is still some point in continuing negotiations, we will do that.” 

Mats Ruland, a mediator for the Norwegian government, said that there were “still several difficult issues which need to be solved”. 

At 1pm on Friday, the two sides took a short break from the talks for lunch, after starting at 9am. On Thursday, they negotiated for 15 hours, breaking off at 1am on Friday morning. 

READ ALSO: What’s the latest on the SAS plane strike?

Marianne Hernæs, SAS’s negotiator on Friday told journalists she was tired after sitting at the negotiating table long into the night. 

“We need to find a model where we can meet in the middle and which can ensure that we pull in the income that we are dependent on,” she said. 

Klokset said that there was “a good atmosphere” in the talks, and that the unions were sticking together to represent their members.

“I think we’ve been extremely flexible so far. It’s ‘out of this world’,’ said Henrik Thyregod, with the Danish pilots’ union. 

“This could have been solved back in December if SAS had not made unreasonable demands on the pilots,” Klokset added. 

The strike, which is now in its 12th day, has cost SAS up to 130m kronor a day, with 2,550 flights cancelled by Thursday, affecting 270,000 passengers.