AP News, November 13th, 2007
German investor confidence has sunk to its lowest level for more than 14 years as the subprime lending crisis fuels expectations of a "considerable economic downturn" in the United States, a closely watched survey showed Tuesday.
The ZEW institute's index, which measures investors' economic expectations for the next six months, fell to minus 32.5 points in November from minus 18.1 points last month.
That was well below the minus 20 points forecast by economists surveyed by Dow Jones Newswires, and the lowest level since February 1993.
"Owing to the continuously extending subprime crisis, the financial market experts have readjusted their economic expectations," ZEW said in a statement.
"They particularly expect a considerable economic downturn in the United States," it added. "The weak U.S. dollar has made business conditions for German exporting firms more difficult. Further risks arise from the high oil price and the development of consumer prices."
Worries over the U.S. economy and expectations that the Federal Reserve may continue cutting interest rates have pushed down the dollar against the euro, which last week reached an all-time high of $1.4752.
A stronger euro threatens to make exports from the euro zone less competitive overseas, and strong exports have been a key element in Germany's economic recovery.
While investors' outlook darkened, ZEW said a subindex measuring the current economic situation in Germany stabilized in November, decreasing by 0.2 points to 70.0 points.
The monthly survey by the Mannheim-based ZEW, or Center for European Economic Research, was based on a poll of 269 analysts and institutional investors.
