By Frances Robinson March 16 (Bloomberg) — German investor confidence probably declined for a sixth month in March amid signs the economy is struggling to expand and as Greece’s fiscal crisis shakes financial markets. The ZEW Center for European Economic Research will today say its index of investor and analyst expectations slipped to 43.5 from 45.1 in February, according to the median of 41 forecasts in a Bloomberg News survey . ZEW releases the report, which aims to predict developments six months ahead, at 11 a.m. in Mannheim. Latest data suggest Germany’s economy, which failed to grow in the final three months of 2009, may continue to stagnate this quarter as the coldest winter in 14 years curbs construction and keeps consumers at home. Concern that Greece won’t be able to rein in its soaring budget deficit has also undermined confidence in the euro area. Still, Germany’s benchmark DAX share index has rallied 7 percent in the past three weeks. “Greece is weighing on confidence, but that doesn’t mean it will depress sentiment month after month,” said Stefan Muetze , an economist at Helaba in Frankfurt. “A lot of pessimism is already priced in — positive and negative influences are more or less balanced.” ZEW’s gauge of current economic conditions will rise to minus 52 from minus 54.8 last month, according to the survey of economists. Exports Plunge While a report last week showed German exports unexpectedly plunged 6.3 percent in January, ending a four-month streak of gains, the euro’s 4.2 percent drop against the dollar this year may bolster foreign sales. “I see a risk that we will see a very weak quarter or even a slight minus” in gross domestic product, Bundesbank President Axel Weber said on March 9. “But then the second and third quarters would be even stronger. The recovery process that began in summer 2009 is essentially intact.” The central bank forecasts the German economy, Europe’s largest, will grow 1.6 percent this year. It shrank 5 percent in 2009, the most since World War II. Volkswagen AG , Europe’s biggest automaker, said sport- utility vehicle and commercial-van sales rose 27 percent in the first two months of 2010, outpacing industry growth of 20 percent. Chief Executive Officer Martin Winterkorn said on March 11 that the company has “a good tailwind” in China, Brazil and the U.S. Household Spending Rising unemployment and the expiry of government stimulus measures are hurting spending at home. German household spending rose just 0.4 percent in 2009, driven by the government’s “cash- for-clunkers” program, which expired in September. Business confidence unexpectedly fell for the first time in 11 months in February. E.ON AG, Germany’s largest utility, plans to invest less each year in the period through 2012 to save cash after debt surged and energy demand dropped. “We’re pessimistic because, over the next six months, the impact of stimulus programs will peter out,” said Costa Brunner , an economist at Natixis in Frankfurt. “Growth is stagnating now, and rising government debt throughout the euro area is also weighing on sentiment.” To contact the reporter on this story: Frances Robinson in Frankfurt at frobinson6@bloomberg.net
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German Investor Confidence May Drop for a Sixth Month as Economy Stagnates
