ZEW Indicator of Economic Sentiment: Economic Sentiment Continues Recovery

The ZEW Indicator of Economic Sentiment for Germany rose in March 2008 by 7.5 points and now stands at minus 32.0 points after minus 39.5 points in the previous month. This is still well below its historical average of 30.3 points.

Considering the currently weak figures for economic growth in Germany the financial market experts expect growth dynamics to revive from September 2008 on. In particular, the experts are more optimistic for the growth of the US-economy in the next six months. Moreover, they expect the US-Dollar to appreciate versus the Euro. This should benefit the export-oriented sectors of the German economy. The experts' mood concerning the development of private consumption has also brightened in March.

"The optimism of the financial analysts is presumably based on the hope that the peak of the financial market crisis will be overcome in half a year and that business dynamics will not weaken more strongly than expected to date", said ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.

The assessment of the current economic situation in Germany worsened slightly in March. The corresponding indicator dropped by 1.6 points to 32.1 points.

Economic expectations for the euro zone improved in March. The indicator increased considerably by 6.4 points and now stands at minus 35.0 points. The indicator for the current economic situation in the euro zone decreased by 2.4 points and now stands at 19.4 points.

285 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 February 25 to March 10, 2008 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