ZEW Indicator of Economic Sentiment: Positive Trend After the Capture of Baghdad

The ZEW Indicator of Economic Sentiment for Germany increased slightly by +0.7 points compared with the previous month's result and now stands at +18.4 points versus +17.7 points in March. However, separate analyses of the responses over the survey period reveal a strong influence of the Iraq war.

The indicator value of the 163 responses given prior to the capture of Baghdad on April 9 amounts to +9.8 - significantly below the previous month's level. By contrast, the 150 responses given from April 10 onwards add up to an indicator value of +27.8. "According to the financial analysts the end of the uncertainties surrounding the Iraq war will provide a positive stimulus for the economy. It remains to be seen, however, whether this impact will be sustained given Germany's underlying, home-made problems", comments ZEW president Prof. Dr. Wolfgang Franz.

A similar impact of the capture of Baghdad can be observed for the eurozone expectations. Over the whole survey period the indicator declined by -0.1 points to +29.5 points (+18.4 points before April 9 / +41.7 after April 10).

Contact

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

Volker Kleff, E-mail: kleff@zew.de