Weaker growth in emerging markets, trade disputes driven by US President Donald Trump's 'America First' policies and the possibility that Britain will leave the European Union without a deal in March are putting the brakes on a nine-year expansion.
The ZEW research institute said its monthly survey showed economic sentiment among investors rose to -15.0 from -17.5 in December. This compared with a consensus forecast of -18.4. "It is remarkable that the ZEW Economic Sentiment for Germany has not deteriorated further given the large number of global economic risks," ZEW President Achim Wambach said.
The indicator nevertheless remained well below the long-term average at 22.4 points, the institute said. A separate gauge measuring investors' assessment of the economy's current conditions plunged to hit a four-year low at 27.6. Analysts had expected the indicator to edge down to 43.5 from 45.3 in the previous month.
The German economy grew by 1.5 percent in 2018, the weakest rate in five years and markedly slower than the previous year, data showed last week, as exporters are hit by US trade disputes and the car industry struggles to adjust to stricter pollution standards.
The government will update its 2019 economic growth forecast next week. In October, the economy ministry had predicted gross domestic product would expand by 1.8 percent this year. The Ifo institute last month reduced its forecast to 1.1 percent.