By Maria Martinez
BERLIN (Reuters) -German investor morale rose more than expected in May, recovering from its sharp decline the previous month, the ZEW economic research institute said on Tuesday.
The economic sentiment index rose to 25.2 points from -14.0 points in April. Analysts polled by Reuters had pointed to a reading of 11.9.
“With a new government in place, some progress in the tariff disputes and a stabilising inflation rate, optimism has increased,” ZEW President Achim Wambach said.
The rebound compensates for some of the losses in April, when German investor morale posted its strongest decline since Russia invaded Ukraine in 2022 due to uncertainty unleashed by U.S. tariffs.
In almost all industries, sentiment improved in the May survey, with a particular improvement for the banking industry and export-intensive sectors such as the automobile and chemical industries.
The most recent interest rate cut by the European Central Bank and anticipated future rate cuts have a positive effect particularly for the construction industry, ZEW added.
The respondents also expect domestic demand, which has been subdued lately, to pick up on a six-month horizon and boost the German economy, which is currently stagnating.
Germany’s next government is hoping to unleash domestic consumption to revive stalled growth in an economy that has been driven for decades by exports.
The indicator for assessments of the current economic situation fell in May to -82.0 from -81.2 points.
The score, in a range from minus 100 to plus 100, is based on a survey of about 350 Germany-based financial analysts at banks, insurers and large industrial companies.
(Additional reporting by Friederike Heine; Editing by Rachel More)
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