ZEW Indicator of Economic Sentiment - Concerns about Economic Development Increase Slightly

The ZEW Indicator of Economic Sentiment for Germany decreased in December 2007 once again and now stands at minus 37.2 points after minus 32.5 points in the previous month. This is still well below its historical average of 31.4 points.

The financial market experts see clear risks for economic growth in important industrial countries, particularly in the United States. This impairs the export prospects of the German economy. The strong Euro has furthermore increased uncertainty for German exporters. The experts forecast private consumption to remain more or less stable in the next six months. However, they do not expect consumer spending to pick up.

"Domestic and worldwide risks slow down business cycle dynamics. The dilution of domestic reforms and the uncertainty on the financial, currency and commodity markets have left their marks", said ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.

The assessment of the current economic situation in Germany also decreased in December. The corresponding indicator dropped by 6.5 points to 63.5 points.

Economic expectations for the euro zone worsened in December. The indicator diminished by 5.7 points and now stands at minus 35.7 points. The indicator for the current economic situation in the euro zone decreased by 0.6 points to 59.6 points.

284 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 26 to December 10, 2007 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