German investor sentiment rises on expectations of easing COVID restrictions

The DAX chart of the German stock price index is pictured on the stock exchange in Frankfurt, Germany, February 10, 2022. REUTERS/Staff

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BERLIN, Feb 15 (Reuters) – German investor sentiment rose in February expecting an easing of restrictions aimed at containing COVID-19, allowing growth in Europe’s largest economy to resume , according to a survey published on Tuesday.

Economic research institute ZEW said its economic sentiment index rose to 54.3 from 51.7 in January. A Reuters poll had indicated an increase to 55.0.

“Germany’s economic outlook continues to improve in

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February despite growing economic and political uncertainties,” ZEW Chairman Achim Wambach said in a statement.

“Financial market experts expect an easing of pandemic-related restrictions and an economic recovery in the first half of 2022. They still expect inflation to decline, albeit at a slower pace and from a higher level than previous months,” he added. “As a result, more than 50% of experts now predict a rise in short-term interest rates in the euro zone in

the next six months.”

An index of current conditions fell from -10.2 to -8.1 points. The consensus forecast was for a reading of -6.0.

VP Bank’s Thomas Gitzel said in a note that a Russian military incursion into Ukraine could derail Germany’s recovery, especially if Western powers respond with sanctions on Russia’s energy sector and the Kremlin halts supplies of gas to Europe.

“The conflict in Ukraine could spoil the economic recovery,” he wrote in a note. “The United States as well as the EU will try in the event of a Russian offensive to largely spare the energy sector from sanctions. But there are still risks that could dampen economic optimism.”

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Written by Joseph Nasr and Rene Wagner Editing by Madeline Chambers

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James R. Rhodes