By Miranda Murray
BERLIN (Reuters) -German investor morale rose more than expected in June, the ZEW economic research institute said on Tuesday, reporting an increase in its economic sentiment index to 47.5 points from 25.2 points in May.
Analysts polled by Reuters had pointed to a reading of 35.0.
The optimism in the ZEW index mirrors the latest forecasts from four German economic institutes published last week, which now see Europe’s largest economy growing this year after two years of contraction.
“Confidence is picking up,” said ZEW president Achim Wambach.
Fiscal policy measures announced by the German government, along with the European Central Bank’s recent interest rate cuts, could bring economic stagnation in Germany to an end, said Wambach.
The German cabinet approved a 46 billion euro ($53 billion) tax relief package this month to support companies and revive the sluggish economy from this year through 2029.
Germany’s parliament also approved plans for a massive spending surge in March, creating a 500 billion euro infrastructure fund and largely removing defence investment from the rules that cap borrowing.
VP Bank analyst Thomas Gitzel said some scepticism about the positive results was needed in light of Europe’s trade dispute with the United States and tensions in the Middle East.
“However, it is just as possible that the waves in the Middle East will calm down and the tariff disputes with the U.S. will be resolved. This is precisely why economic hopes remain justified,” said Gitzel.
The ZEW index measuring current conditions, though still in negative territory, also rose more than expected in June, to -72.0 points, from -82.0 points the month before.
That forecast had been for -75.0 points in June.
Some 200 analysts and institutional investors took part in ZEW’s June survey, which was conducted between June 6 and 16.
(Reporting by Miranda Murray and Ludwig Burger, Editing by Rachel More and Joe Bavier)
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