ZEW Indicator of Economic Sentiment - Slight Correction of Economic Expectations

The ZEW Indicator of Economic Sentiment for Germany slightly declined in July 2009. The indicator dropped by 5.3 points and now stands at 39.5 points after 44.8 points in the previous month. This value is above the indicator’s historical average of 26.3 points.

Economic expectations for Germany slightly dropped in July for the first time after an increasingly optimistic outlook in the previous months. A considerable risk for the future development of the German economy is whether lending to firms and households works out. In contrast, the surprisingly positive figures for incoming orders and industrial production have positively affected business expectations.

The assessment of the current economic situation in Germany remained almost unchanged in July. The corresponding indicator increased marginally by 0.4 points to minus 89.3 points.

"The stabilisation of the assessment of the current situation and the economic expectations for Germany confirm hitherto existing forecasts that economic performance will decrease by six percent in this year. The growth rates are likely to move around zero percent until the first months of 2010" says ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.

The economic expectations for the euro zone dropped in July by 3.2 points compared to the previous month. The respective indicator now stands at 39.5 points. The indicator for the current economic situation in the euro zone did not change in July and still stands at minus 90.7 points.

Contact

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

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