German investor confidence falls

FRANKFURT - Agence France Presse

A metal worker grinds a piece in a factory in Herbolzheim, Germany. German investors are concerned over the ongoing euro crisis. AP photo

German investor confidence plummeted in June, sustaining its steepest fall in nearly 14 years, amid increased concerns over the health of Spain’s banking system, a new survey showed yesterday.

The ZEW think tank’s economic expectations index plunged 27.7 points to minus 16.9 points, “the steepest fall since October 1998,” the organization said in a statement. “The escalation of the situation in the Spanish banking sector contributed to the sharp drop in the indicator,” ZEW president Wolfgang Franz explained.

In addition, the poll was carried out before the outcome was known of the Greek elections at the weekend, he pointed out. “Analysts’ expectations offer a stern warning against an over-optimistic assessment of Germany’s economic outlook this year,” Franz said. There were unmistakable risks of a sharp economic downturn in Germany’s key trading partners. “The outcome of the Greek vote offers a short breathing space, but nothing more and nothing less,” the ZEW chief said.