ZEW Indicator of Economic Sentiment - Expectations Recovered Significantly

The ZEW Indicator of Economic Sentiment for Germany recovered significantly by 9.5 points in December. Compared with minus 28.5 points in November, the indicator's current level of minus 19.0 points is nevertheless still far below its historical average of 33.7 points.

This rise of the indicator might be due to the fact that the recent economic upswing is gaining momentum, thus creating a stable foundation for 2007. At present, exports are developing dynamically as a result of Germany's competitiveness. The order situation remains stable and German companies are increasing investments in the expansion of their production capacities. The recovery on the labour market also strengthens consumer confidence.

"Expectations have passed through the trough und are now on the rise thanks to robust economic perspectives. Economic policy makers are called upon to use this chance and to show more stout-heartedness and targeted approaches", said ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.

This month the financial experts' assessment of the current economic situation in Germany improved significantly. The corresponding indicator is up from 53.0 points to 63.5 points in December.

Economic expectations for the euro zone improved in December. The indicator rose by 8.0 points and now stands at minus 3.0 points. The corresponding indicator for the current economic situation in the euro zone increased significantly in this month by 6.8 to 56.8 points.

303 analysts and institutional investors participated in this month's ZEW Financial Markets Survey which is conducted on a monthly basis by the Centre for European Economic Research (ZEW), Mannheim. The participants were asked from November 27 to December 11, 2006 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 within a timeframe of six months. The horizontal line indicates the historical mean of the indicator.

Contact

Dr. Sandra Schmidt, E-mail: s.schmidt@zew.de  

Matthias Köhler, E-mail: koehler@zew.de