Main index falls to 14.7 from 8.5 in June
Analysts expected reading of 10.5
Higher interest rates, weak export markets dim recovery hopes

BERLIN, July 11 Reuters German investor morale clouded over in July, the ZEW economic research institute said on Tuesday, reporting a surprisingly sharp drop in its economic sentiment index to 14.7 points from 8.5 points in June.

Analysts polled by Reuters had pointed to a July reading of 10.5.

Higher shortterm interest rates in the euro zone and the United States as well as weak export markets like China were key reasons for the negative outlook, said ZEW president Achim Wambach.

Financial market experts predict a further deterioration in the economic situation by yearend, he added.

The fall is in line with the most recent Ifo survey of German business morale and the Sentix index for the euro zone, which both fell more than expected.

The economic outlook for the second half of the year has become even gloomier, summarized Helaba senior economist Ralf Umlauf on Tuesday with an eye to the indicators.

A ZEW index measuring how investors currently assess the German economy also fell in July, dropping 3 points to 59.5.

The German economy fell into recession in early 2023 as household spending, a key source of growth for Europe39;s economic engine, succumbed to pressure from high inflation.

Economists do not expect it to make any more big leaps this year not least because of the sharp rise in key interest rates, which are just…