ZEW Financial Market Survey: US Interest Rate Cut to Boost Economic Gloom in Germany

Economic expectations for Germany have continued its downfall and currently stand at -4.4 points, according to the ZEW Financial Market Survey. Compared to the previous month, the indicator has declined by 4.3 per cent. Now, the number of pessimists in the panel clearly outmatches the number of optimists.

The ZEW Financial Market Survey is carried out monthly by the Centre for European Economic Research (ZEW) and includes 400 analysts and institutional investors, who are asked about their medium-term expectations concerning economic activity and capital markets. The ZEW Indicator of Economic Sentiment shows the balance between positive and negative expectations regarding future economic activity in Germany.

The unanticipated US interest rate cut on 3 January has had a negative effect on the expert's economic outlook for Germany. This is the result of a separate evaluation of analyst estimates before and after the interest rate cut. Financial analysts consider the decision of the US Central Bank as an indication of the economic outlook for the US to be even worse than expected and of a weaker global growth. This would also negatively affect the German economy.

Contact

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