Frankfurt: German investor confidence suffered a sharper than expected tumble in February, data showed yesterday, as growing concerns over political uncertainty cast a shadow over Europe's top economy.
The closely-watched index for investors' future expectations fell by 6.2 points to 10.4 points this month, the Mannheim-based ZEW institute said in a statement.
Analysts surveyed by Factset had forecast a shallower fall to 14.9 points in February from 16.6 points in January.
"The downturn in expectations is likely to be the result of the recently published unfavourable figures for industrial production, retail sales and exports," ZEW president Achim Wambach said in a statement.
"Political uncertainty regarding Brexit, the future US economic policy as well as the considerable number of upcoming elections in Europe further depresses expectations," he added.
Germany rounded off 2016 with a strong quarter of growth at 0.4 percent, official data released yesterday showed. But pointers towards the future outlook have become less robust as 2017 has got under way.
The Munich-based Ifo institute's business confidence index fell in January, albeit less sharply than the investor survey, defying analysts' predictions of an increase. Ifo's barometer however remains at a level indicating expansion, and a consumer survey from pollsters GfK found the public in "sparkling" mood in January.
In the light of the ZEW reading on Tuesday, "the more positive message from January's business and consumer confidence surveys may now be looking a little too optimistic," said economist Jessica Hinds of Capital Economics.
"Economic indicators speak for a solid start to the year 2017," the German economy ministry commented ahead of the ZEW release yesterday, pointing to solid business confidence and high levels of employment.
Nevertheless, "uncertainties remain present, especially in the foreign trade environment," they acknowledged.
Germany's traditional export motor -- responsible for a record €253bn ($269bn) trade surplus last year -- faces headwinds as traditional free trade champions the United States and Britain hint at protectionism.
US President Donald Trump is mooting border taxes to put his "America first" campaign rhetoric into action -- potentially undermining business from Germany's biggest export customer.
And trade with key partner Britain could suffer if the island nation and the rest of the EU are unable to agree an amicable divorce as London moves to implement a referendum decision to quit the bloc.
German exports to countries outside its European Union neighbours already fell slightly in 2016, official data released last week showed. Berlin can look around at a eurozone in better shape than for some time, with 1.7 percent growth in 2016 -- according to Eurostat data released yesterday -- beating growth in the US of 1.6 percent.
Investors, though, fear the euro single currency area will suffer just as much as Germany, with ZEW's sub-index for the eurozone outlook falling 6.1 points to 17.1.
ZEW surveyed 213 financial actors in Germany between January 30 and February 13 to compile its index.
