German economic sentiment sinks, raises concerns on post-Brexit impact

Germany’s economic sentiment plunged to the lowest level since 2012 during the month of June, raising concerns over the post-Brexit impact that caused instability in the European banking and financial system.

The German ZEW economic sentiment index shrank to -6.8, down from 19.2 in June and well below economists’ forecasts of a positive reading of 9. This month’s reading is the lowest level since November 2012.

The index tracking the current assessment of business conditions in Germany fell to 49.8, down from 54.5 in June, according to the closely watched survey conducted by the German ZEW think tank. This was below forecasts of a reading of 51.8. The assessment of eurozone economic sentiment fell to minus 14.7, down from 20.2 in June.

"Uncertainty about the vote’s consequences for the German economy is largely responsible for the substantial decline in economic sentiment," said Achim Wambach, President ZEW.

Meanwhile, he further said that concerns about the export prospects and stability of European banking and financial systems are likely to be a burden on the economic outlook of the currency bloc.