Sharp Downturn in Expectations

The ZEW Indicator of Economic Sentiment for Germany decreased sharply in February, falling 18.0 points to a new reading of 8.7 points. The indicator is thus slightly below its December 2019 level. The assessment of the economic situation in Germany has also worsened compared to the previous month, with the corresponding indicator dropping to a level of minus 15.7 points, 6.2 points lower than in January.

“The feared negative effects of the Coronavirus epidemic in China on world trade have been causing a considerable decline of the ZEW Indicator of Economic Sentiment for Germany. Expectations regarding the development of the export-intensive sectors of the economy have dropped particularly sharply. Besides, the end of 2019 and the beginning of 2020 saw a worse-than-expected development of the German economy. Both the downward revision of the assessment of the economic situation and the downturn in expectations show clearly that economic development is rather fragile at the moment,” comments ZEW President Professor Achim Wambach..

The financial market experts’ expectations regarding the economic development in the eurozone have experienced a slightly less pronounced drop than those for Germany, with the corresponding indicator falling by 15.2 points to a current level of 10.4 points in February. The indicator for the current economic situation in the eurozone in February remained almost constant, leaving the index at a level of minus 10.3 points, 0.4 points lower than in January.

Along with economic expectations, inflation expectations for the eurozone are also falling, with the corresponding indicator dropping 13.7 points to 4.7 points.

More information and studies on the ZEW Indicator of Economic Sentiment and the release dates 2020 (as PDF file, 28 KB) and the historical time series (as Excel file, 81 KB)