German ZEW: Fast pace economic growth not sustainable

German economic sentiment reached a 16 month low in May, according to a report published by the German ZEW Centre for European Economic Research.

The survey, conducted among 248 analysts, reports a decline of 10.1 points compared to previous months, with 33.1 points, expectations about Germany are now significantly below the European average of 55.2 points.

Yet the results are contradictory, while expectation for economic growth in Germany have fallen for the fifth month in a row, the assessment of the current economic climate in Germany has improved by 2.6 points. Analysts are also expecting the DAX index to rise.

“The decline in economic expectations has to be understood against the backdrop of strong economic growth in the first quarter. It becomes increasingly clear that the German economy won’t be able to sustain the current fast pace of economic growth. Nevertheless, we are still expecting overall positive economic development in 2014” says Clemens Fuest, president of the ZEW Centre. 

Meanwhile, OECD secretary general Angel Gurría highlighted the need for Germany to endorse a more inclusive growth path, highlighting the that the rapid increase of the low wage sector and temporary employment have lead to a sharp decline in upward mobility for low earners over the last years.

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