German ZEW Index Dropped Amid The Banking Crisis

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As reported by ZEW, one of Germany’s leading economic research institutes demonstrated a decline in the sentiment of German investors in March. This is explained by the rising fears about the threat of a financial crisis resulting in the ZEW index’s collapse after five consecutive months of growth.

Germany's ZEW Economic Sentiment Index, which measures the experts’ expectations regarding the anticipated economic developments over the next six months, fell to 13.0 in March. The figures turned out to be lower than the consensus forecasts of the economists, who projected it at 17.1.

"The international financial markets are under strong pressure, and the high level of uncertainty is reflected in the economic expectations," said ZEW president Achim Wambach.

Lower expectations were a side effect of the collapse of the Silicon Valley Bank and Signature Bank along with the acquisition of 167-year-old Credit Suisse. Investors are worried that there may be other ticking time bombs elsewhere in the financial system just waiting to explode.

Judging by the statements of VP Bank AG Chief Economist Thomas Gitzel, the fears that are mounting among investors cannot be considered unjustified.

He also mentioned that the focus was not so much on the fear of further bank collapses as on the question of whether or not banks on both sides of the Atlantic would become even stricter.

That being said, Alexander Krüger, Chief Economist at Hauck Aufhaeuser Lampe Privatbank AG believes that there is still a great recovery potential provided that the fears of a banking crisis do not become a reality.

According to Krüger, the consistently poor assessment of the economic climate was more significant in economic terms.

The assessment of the economic situation in Germany went further into the red in March, as the figures dropped from -45.1 to -46.5 a month earlier and below analysts' forecast of -44.3.

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