The latest data from Europe's largest economy Germany on Tuesday showed that while economic sentiment is improving, economic slowdowns and political risks elsewhere are a "burden" for the country's export industry, the main driver of Germany's growth.
The ZEW institute's latest Indicator of Economic Sentiment rose for the second month in a row in April with the index gaining 6.9 points from the previous month, to total 11.2 points. The index showed that investor morale had risen far more than expected in April, surpassing a Reuters consensus forecast of 8.0.
However, the survey of 225 German analysts and investors conducted between April 4-18 showed that their assessment of the current situation in Germany was worsening, with the gauge falling by 3.0 points to 47.7 points.
ZEW's head of research said the data was influenced by better economic data from China but that the world's second largest economy still posed a risk to Germany's export-driven growth.
"Surprisingly positive economic news from China seems to have improved the sentiment amongst financial market experts," Sascha Steffen from ZEW said of the survey data.
"On balance, however, the continued poor growth in China and other important emerging markets continues to be a burden for the German export industry."
Closer to home, Steffen said concerns about the U.K.'s "possible exit from the EU seems to be having a negative impact."
China and the U.K. are among Germany's largest export markets. As such, an economic slowdown in China or a "Brexit" (if the U.K. votes to leave the European Union on June 23) could directly damage Germany's economy and demands for its goods.
In a ranking of Germany's trading partners in terms of foreign trade, Germany statistics body Destatis said in March that the U.K. was the country's third largest export market in 2015, with Germany exporting goods worth 89.3 billion euros ($101.1 billion) to the U.K. that year.
China was the fifth most common destination for Germany's exports with Germany exporting goods worth 71.3 billion euros but most of the goods imported to Germany came from China. with those imports worth 91.5 billion euros.
