German investor confidence dropped to the lowest in more than seven years in September as higher interest rates and a planned tax increase dimmed the outlook for growth in Europe's largest economy.
The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations fell to minus 22.2, the lowest since January 1999, from minus 5.6 in August. Economists expected the index to slip to minus 8, the median of 38 estimates in a Bloomberg News survey showed.The decline bolsters expectations that German growth will slow next year from the fastest pace since 2000. The European Central Bank has signaled a further rate increase to curb inflation in the dozen euro nations and Chancellor Angela Merkel's government plans to raise a sales tax in 2007
Not entirely unconnected with this investor sentiment is today's warning from the IMF that the current global cycle may have peaked:
Global economic growth is at risk of peaking because of high oil prices and rising protectionist sentiment, warned Rodrigo de Rato, the International Monetary Fund’s managing director, on Tuesday.
“The global growth cycle may be close to its peak,” Mr de Rato said in his opening statement at the joint IMF and World Bank plenary session in Singapore.
“The best hope for continued high growth lies in further increases to international trade. If this does not happen, the outlook is less encouraging.”