German investor confidence continued to decline in August despite strong second-quarter growth in the country's economy, a key indicator released Tuesday showed. The index, published by the Mannheim-based ZEW Centre for European Economic Research, fell 7.2 points to 14 points, following a similar drop in July, accoring to dpa. The index, which measures the economic mood amongst analysts and institutional investors, had hit a three-year high about a year earlier, reaching 57.7 last September. The index news came days after statistics showed that the German economy had stormed ahead by 2.2 per cent during the second quarter, with a surge in exports and a pickup in investment helping to power the nation to its fastest growth rate in two decades. The decline in the index suggests that the second-quarter growth rate cannot be sustained, the ZEW centre said, blaming slow economic growth in the US and other eurozone countries. "Against the background of flagging international economic growth, financial market experts clearly did not quite trust the euphoria around the growth of individual sectors," said ZEW president Wolfgang Franz. Even if the German economy were to stagnate in the next six months, overall growth could still reach 3 per cent in 2010, the ZEW calculated. Second-quarter growth was 2.2 per cent higher than the first quarter of 2010. The German Industry Association (BDI) expressed optimism about this year's growth prospects. "We could achieve three per cent economic growth this year," BDI chief executive Werner Schnappauf told public broadcaster ARD, adding that this could provide an estimated 18 billion euros (23 billion dollars) in taxes. "This means industry is pulling the wagon out of the crisis," Schnappauf added. Official government figures predict 1.4 per cent growth for Germany in 2010. Economic experts had expected the investor confidence index to increase slightly.
