Investor confidence in the leading European economy, Germany, slipped more than forecast in the first month of the second quarter as inflation and tighter fiscal policy raised concerns for the outlook, according to Bloomberg. On Tuesday, the ZEW Center for European Economic Research reported that its index of investor and analyst expectations targeting economic developments in the coming six months dropped to 7.6 in April from 14.1 the month before. Economists’ had forecast a more modest decline of about three points.
The doubt over the economic outlook is seen as stemming from surging oil prices due to turmoil in the Middle East, and concerns were compounded by the disaster in Japan. Additionally, the European Central Bank’s decision to increase its benchmark interest rate also is likely weighing on the outlook. Aline Schuiling of ABN Amro offered her perspective that the index reading “is consistent with growth slowing down this year after what will probably have been a very strong first quarter,” with growth projected to slow to 2.8% of gross domestic product in 2011 from the 3.6% expansion recorded last year.