Germany’s economic sentiment deteriorated to a five-month low in October amid heightened uncertainty surrounding trade talks with the UK and the run-up to the presidential elections in the US, survey data from the ZEW – Leibniz Centre for European Economic Research showed on Tuesday.

The ZEW Indicator of Economic Sentiment fell more-than-expected to 56.1 in October from 77.4 in September. The score was forecast to drop to 73.0. The latest reading was the lowest since last May.

Meanwhile, the current conditions index improved to -59.5 from -66.2 in the previous month. The expected reading was -60.0.

The recent sharp rise in the number of Covid-19 cases has increased uncertainty about future economic development, as has the prospect of the UK leaving the EU without a trade deal, ZEW President Achim Wambach, said.

The current situation in the run-up to the presidential election in the United States further fuels uncertainty, Wambach added.

“The great euphoria witnessed in August and September seems to have evaporated,” Wambach said.

The largest euro area economy had contracted by a record 9.7 percent in the second quarter. However, with the easing of lockdown restrictions, the economy is widely expected to rebound in the third quarter.

Financial market experts’ sentiment concerning the economic development of the euro area also took a nosedive in October, the survey showed. The economic sentiment indicator plunged 21.6 points to 52.3 in October.

Meanwhile, the current economic situation climbed 4.3 points to minus 76.6 points in October.

The material has been provided by InstaForex Company – www.instaforex.com

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