German Economic Sentiment Plummets Amid Rising Oil And Trichet's Rate Hike

German investor confidence took a nosedive in April as a result of rising oil prices and the ECB’s tighter monetary policy stance.

The ZEW Indicator of Economic Sentiment fell 6.5 points to a 7.6, well below the all time average of 26.6. Expectations were for a slighter fall, to 11.3, according to Bloomberg.

From ZEW:

Two factors may have contributed to this decline. On the one hand, the current boom doesn’t leave much room for a further improvement of the current economic situation. On the other hand,  experts are more and more aware of the risks for the world economy resulting from the events in Japan and in the Arab world.

“Despite the positive economic development, considerable risks may result from increasing commodity prices. These price increases could lead to second-round effects that could then force the European Central Bank to adopt a more restrictive monetary policy,” says ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.

The ZEW has made a pretty clear turn around from its highs toward the end of 2010.

Don’t miss: The 8 shocks Citi believe will slam the global economy >

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Photo: ZEW

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