German investor confidence has fallen more sharply than expected in the wake of the political turmoil in the Arab world and Japan's devastating earthquake, a survey showed Tuesday.
The ZEW institute's index, which measures investors' economic outlook for the next six months, dropped to 7.6 points for April, from 14.1 the previous month. Experts had been predicting a drop to around 10 at worst, and the indicator is well below a historical average of 26.6.
Germany's economy has powered ahead over the past year, fed initially by strong exports, and the ZEW said a factor in the fall in confidence was the fact that "the current boom doesn't leave much room for a further improvement."
There also are "considerable risks" from increasing commodity prices, ZEW president Wolfgang Franz said. That could help push the European Central Bank into further interest rate increases following last week's quarter-point rise.
Despite the overall drop, ING economist Carsten Brzeski noted that investors' assessment of the current situation in Germany improved for the 23rd consecutive month.
Recent events in the Arab world and Japan have generated doubts about the sustainability of Germany's recovery, but "so far, these doubts remain unjustified," he added.
The Center for European Economic Research, or ZEW, questioned 291 analysts between March 28 and April 11 for its latest survey.
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