2017.12.1207:58:00UTC+00German Economic Sentiment Deteriorates More Than Forecast

Germany's economic sentiment weakened more-than-expected in December amid political uncertainty, a closely-watched survey revealed Tuesday.

The ZEW Indicator of Economic Sentiment fell 1.3 points to 17.4 in December, the Mannheim-based think tank ZEW said. The indicator remained below its long-term average of 23.7 and the expected level of 17.6.

Meanwhile, the assessment of the current economic situation rose 0.5 points to 89.3 points, the highest since July 2011. The score was forecast to drop marginally to 88.7.

Overall, the outlook for the German economy in the coming six months remains positive, ZEW President Achim Wambach said.

"The current state of uncertainty surrounding the government formation in Germany has not had any significant impact on the assessment of the economic outlook," Wambach said.

However, financial market experts expect to see negative effects resulting from this with regard to the Brexit negotiations as well as EU reforms, he added.

Investor sentiment seems likely to rise again once a government is formed, even in the worst case scenario that another election is needed first, Jennifer McKeown, an economist at Capital Economics, said.

With unemployment very low, monetary policy still supportive and global demand healthy, German GDP is still likely to rise by just over 2 percent in 2018 after an increase of about 2.5 percent this year, the economist added.

The survey showed that the financial market experts' sentiment concerning the economic development of the Eurozone decreased by 1.9 points to 29.0 points in December.

On the other hand, the indicator for the current economic situation in the Eurozone continued to improve in December, climbing by 2.9 points to a level of 50.7 points in December.