BERLIN: German investor confidence fell to the lowest level in a year as Europe’s largest economy faces the fallout of Volkswagen AG’s emissions scandal and weaker growth in emerging markets.
The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months ahead, slid to 1.9 in October from 12.1 in September. That’s the seventh consecutive decline and compares with an estimated drop to 6.5 in a Bloomberg survey of economists.
Volkswagen’s admission on Sept. 18 that it fixed emissions tests in 11 million of its diesel-engine cars cost the company as much as $33 billion in market value and sent Germany’s benchmark DAX Index down 3.5 percent in the two trading days that followed. The news broke as Germany’s trade-focused economy struggled to adapt to receding demand in emerging markets.
Exports fell 5.2 percent in August, the most since the height of the 2009 recession. Factory orders and industrial output unexpectedly declined, and the country’s leading economic research institutes lowered their 2015 growth forecast. At the same time, domestic consumption, investment and a recovery in the neighboring euro region are still lending support to the German economy. Business confidence as measured by the Ifo research institute unexpectedly improved in September.
