German Economic Sentiment Tumbles On Weak Data, Political Uncertainty

Germany's economic sentiment deteriorated more-than-expected in February to its lowest level in four months, as investor expectations were dampened by the recent weak economic data and political uncertainty.

The ZEW Indicator of Economic Sentiment for Germany declined to 10.4 from 16.6 in January, survey data from the the Mannheim-based Centre for European Economic Research/ZEW showed Tuesday.

The latest reading was the weakest since October, when it was 6.2. Economists had expected a modest fall to 15.

The current conditions index of the survey dropped to 76.4 from 77.3. Economists had forecast a reading of 77.

"The downturn in expectations is likely to be the result of the recently published unfavorable figures for industrial production, retail sales and exports," ZEW President Achim Wambach said.

"Political uncertainty regarding Brexit, the future US economic policy as well as the considerable number of upcoming elections in Europe further depresses expectations. Nevertheless, the economic environment in Germany has not significantly worsened."

The economic sentiment index for the euro area shed 6.1 points to reach 17.1 points. In contrast, the indicator for the current economic situation in the Eurozone climbed 3.2 points to a level of 2.8 points in February, reaching positive territory again for the first time since July 2011.

Data released by Destatis earlier on Tuesday showed that the German economic growth improved on domestic demand and investment in the fourth quarter of 2016 despite weak contribution from the net trade.

Gross domestic product grew 0.4 percent sequentially, faster than the revised 0.1 percent rise in the third quarter. In 2016 as a whole, the economy expanded 1.9 percent.

The European Commission on Monday raised Germany's growth projection for this year to 1.6 percent and the outlook for next year to 1.8 percent.

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