ZEW Indicator of Economic Sentiment: Hopes for a Quick Recovery in Germany Don't Come True yet

The ZEW Indicator of Economic Sentiment derived from the ZEW Financial Market Survey has decreased again in June after it had increased in April and May. It currently lies at minus 8.1 points.

This corresponds to a decline by 3.8 points within a month. Hopes for a quick recovery of the German economy have therefore been shattered.

In June 310 analysts and institutional investors from Germany have participated in the ZEW Financial Markets Survey which is conducted monthly by the Centre for European Economic Research (ZEW), Mannheim. The participants have been asked about their medium-term expectations concerning economic activity and capital markets. The ZEW Indicator of Economic Sentiment is the balance between positive and negative expectations of the future economic development in Germany concerning the timeframe of six months.

In spite of these negative expectations for the German economy the expectations concerning further interest rate cuts by the ECB have decreased. By now only three quarters of the participants believe that the ECB will stimulate growth through further expansion oriented adjustments in the interest rate. In April 90 percent of the participants believed that such steps would be taken. As for the United States, where interest rates have been decreased several times by now, the analysts are becoming increasingly optimistic. Around 40 percent of them expect the economy to recover there within the coming six months.

Contact

Dr. Felix Hüfner, E-mail: huefner@zew.de