Expectations Increase Slightly, but Remain Strongly Negative

The ZEW Indicator of Economic Sentiment for Germany recorded an increase in the current May 2022 survey, rising 6.7 points to a new reading of minus 34.3 points. The assessment of the economic situation in Germany has worsened again in the current survey. The corresponding indicator dropped 5.7 points to a new level of minus 36.5 points. This is the third decrease of the indicator since the start of the war in Ukraine. The expectations and assessments of the economic situation continue to point to a deterioration of the German economy during the next six months.

“The ZEW Indicator of Economic Sentiment increased moderately this month but still remains at a relatively low level. Compared to last month, the outlook for the economic situation in Germany is thus slightly less pessimistic. The experts still assume that it will continue to deteriorate, but at a lower pace than expected before. The strong restrictions in China to fight against new Covid-19 infections lead to a strong reduction in the assessment of the current economic situation in China. This is a heavy weight on the future development of the German economy. With regard to the ECB’s monetary policy stance there is a large majority of experts expecting an increase in interest rates during the next six months. Accordingly they expect a decline of inflation rates from their very high current level,” comments ZEW President Professor Achim Wambach on current expectations.

The financial market experts’ sentiment concerning the economic development of the eurozone increased strongly by 13.5 points in May and currently stands at minus 29.5 points. The situation indicator fell to a new level of minus 35.0 points, dropping 6.5 points compared to the previous month.

Inflation expectations for the eurozone declined again. The indicator currently stands at minus 10.6 points, 36.5 points lower than in April.

More information and studies on the ZEW Indicator of Economic Sentiment and the release dates 2022 (as PDF file, 28 KB) and the historical time series (as Excel file, 81 KB)

More about Achim Wambach on Twitter: @AchimWambach