Germany’s economy and related exchange traded fund (ETF) may not see a quick recovery, as ongoing worries concerning consumer confidence overshadow government stimulus plans.
The German consumer confidence in April is slated to drop for the first time since the fall of 2008, settling at 2.4%, down 0.1% from March, according to The International Herald Tribune. Economic expectations are at negative 32.8 points, dropping 4.9 points in March. The drop in expectations is attributed to consumers’ fear over job losses.
Poor expectations are indicating that Germany’s economy has not bottomed out and will soon reach a lower turning point, reports Sakari Suoninen and Krista Hughes for Reuters UK. The German stimulus package won’t show signs of improving the economy until after the third quarter.
It is also predicated that the European Central Bank will help by cutting rates within the next week by a minimum of 0.50%.
The government will revise the previously calculated 2.25% contraction in the economy to a possible 4.5% contraction for the year, writes Andrea Thomas for The Wall Street Journal. Commerzbank AG estimates the economy will contract 6% to 7%.
Talks over a possible third fiscal stimulus plan were rebuked by German Economy Minister Karl-Theodor zu Guttenberg as “premature.”
- iShares MSCI Germany Index (EWG): down 17.2% year-to-date
Max Chen contributed to this article.
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