Economic Expectations Fall, Assessment of Current Situation Improves

The ZEW Indicator of Economic Sentiment for Germany decreased in the September 2021 survey, falling 13.9 points to a new reading of 26.5 points. Since May 2021, the indicator has dropped for the fourth consecutive time. The assessment of the economic situation in Germany improved in September 2021 again and currently stands at 31.9 points, 2.6 points higher than in August 2021. The situation indicator has continuously increased since February 2021, when it stood at minus 67.2 points. The situation indicator has increased by 72.0 points since May 2021, while the expectation indicator has decreased by 57.9 points during the same period. The current reading of the ZEW Indicator of Economic Sentiment for Germany implies that over the next six months economic growth in Germany will only slightly be higher than its current reading.

“Expectations fell markedly once more in September 2021. Although financial market experts expect further improvements of the economic situation over the next six months, the expected magnitude and the dynamics of the improvements have decreased considerably. Global chip shortage in the automobile sector and shortage of building material in the construction sector have caused a significant reduction in profit expectations for these sectors. This may have had a negative effect on economic expectations,” comments ZEW President Professor Achim Wambach.

The financial market experts’ sentiment concerning the economic development of the Eurozone also decreased for the fourth consecutive time in September 2021, bringing the indicator to a current level of 31.1 points. This is 11.6 points lower than in the previous month. The indicator for the current economic situation in the Eurozone climbed 7.9 points to a level of 22.5 points compared to August 2021.

Inflation expectations continue their decline. The inflation indicator for the Eurozone decreased by 22.1 points to a new reading of 20.1 points. The experts therefore expect inflation to decline over the next six months.

More information and studies on the ZEW Indicator of Economic Sentiment and the release dates 2021 (as PDF file, 28 KB) and the historical time series (as Excel file, 81 KB)

More about Achim Wambach on Twitter: @AchimWambach