German Investors Rein In Expectations For Strong Economy, ZEW Shows

(Reuters) - German analysts and investors see further growth potential for Europe's biggest economy, though its already strong base means any further improvement may be limited, the ZEW think tank's April survey showed on Tuesday.

The Mannheim-based institute said its monthly survey of economic sentiment fell to 53.3 points from 54.8 in March, undershooting a Reuters consensus forecast of 55.3 points.

That was the indicator's first fall since October, but a separate gauge of current conditions soared to 70.2 points from 55.1 in March, easily beating a consensus forecast for a reading of 56.0.

"Germany is doing fine. In fact, it may now be doing so well that some observers believe it can't get much better," said Berenberg economist Holger Schmieding.

ZEW said the world economy was dampening Germany's export prospects and reducing the potential for further improvement, and some economists also cited concerns about Greece’s debt crisis as a factor in investors' weaker expectations.

However, ZEW economists said the investors surveyed expected a "very good situation" to continue for at least the next half year and noted that German private consumption, seen as the mainstay of growth this year, would strengthen further.

The German government plans on Wednesday to raise its economic growth forecast for this year to 1.8 percent from its current estimate of 1.5 percent and sees a similar rate of growth for 2016, sources have told Reuters.

"Strong tailwinds from a robust labor market, low oil prices and a competitively priced exchange rate as well as the reform successes in countries such as Spain are propelling the German economy forward," said Schmieding.

The Bundesbank agreed with that assessment in a report on Monday which said strong private consumption, low unemployment and rising wages would sustain Germany's upswing for some time to come, despite slower recent industrial performance.

The ZEW index was based on a survey of 238 analysts and investors conducted between April 7-20.