ZEW Indicator of Economic Sentiment - Expectations Rise Again

The ZEW Indicator of Economic Sentiment for Germany improved in September 2008 by 14.4 points. The indicator now stands at minus 41.1 points after minus 55.5 points in the previous month. This is still well below its historical average of 28.0 points.

There are two essential reasons for the recovery of economic expectations in Germany. On the one hand, the ongoing decline of the oil price eases the burden on consumers and firms. On the other hand, the tendency of the euro in the past weeks to depreciate against the US-dollar benefits German exporters.

"Due to the declining oil price the inflationary pressure is decreasing. This should improve the perspectives for German consumption", says ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.

A separate analysis of 31 answers that came in after the bankruptcy of Lehman Brothers shows that the economic expectations for Germany have not deteriorated in the course of the incident. Stock market expectations, however, were corrected downwards significantly.

The assessment of the current economic situation in Germany improved in September 2008. The corresponding indicator increased by 8.2 points to minus 1.0 points.

The economic expectations for the euro zone improved in September as well. The indicator rose by 14.8 points and now stands at minus 40.9 points. The indicator for the current economic situation in the eurozone increased by 12.2 points and now stands at minus 10.0 points.

For further information please contact

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

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