Trump election and German coalition collapse hit economic sentiment

Donald Trump's victory in the US presidential elections and the breakup of Germany's governing coalition are clouding economic prospects for the country, the Mannheim-based ZEW economic research institute said on Tuesday, reported dpa.

The ZEW's indicator of economic sentiment fell by 5.7 to 7.4 points in November compared with October. Analysts had predicted a slight rise to 13.2 points on average.

"Expectations are falling in the current survey, with this probably attributable in particular to the outcome of the US presidential elections," ZEW President Achim Wambach said.

But he added: "Over the last days of the survey period, there were increasingly optimistic voices on the economic outlook for Germany due to the prospect of early elections."

The ZEW's separate index assessing the current economic situation fell further in November by 4.5 points to minus 91.4. A rise to minus 85.0 points had been predicted.

DZ Bank analyst Christoph Swonke noted that the sentiment barometer was well below the long-term average of 21 points.

Political uncertainty was weighing on sentiment, he said. This was in addition to the prospect of US import duties being imposed by Donald Trump's incoming administration.

But he also highlighted hopes for a return to a political capacity to act with early German elections due in February.

Deutsche Bank chief economist Robin Winkler noted that the survey had been taken at a time of peak political uncertainty in Germany and the US.