ZEW Indicator of Economic Sentiment Upward Trend Finally Ceases

In April, the Indicator of Economic Sentiment for Germany, determined on the basis of the ZEW Financial Market Survey, fell for the first time in 15 months. The Indicator now lies at a value of minus 4.5 points. This equals a fall of 5.9 points from the previous month's value. The previous upward trend in the value of the Indicator of Economic Sentiment has therefore ceased. It remains to be seen whether this development will further establish itself in the coming months.

In April, 312 analysts and institutional investors from Germany participated in the ZEW Financial Markets Survey which is conducted on a monthly basis by the Centre for European Economic Research (ZEW), Mannheim. Analysts were surveyed about their mid-term expectations concerning the economic development and capital market trends in Germany and the euro area. The ZEW Indicator of Economic Sentiment shows the balance between positive and negative expectations regarding future economic activity in Germany.

The slight improvement in economic expectations may be a result of widespread expectations of a cut in interest rates by the European Central Bank. Almost 91 per cent of the surveyed experts are convinced,that interest rates will be cut in the near future. This is a greater consensus of experts than ever before, since European monetary policy was begun in 1999.

Contact

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