ZEW Indicator of Economic Sentiment: Positive Signs for the Second Half of the Year

The ZEW Indicator of Economic Sentiment derived from the ZEW Financial Market Survey rises to +50.2 points in February. This corresponds to an increase of +14.3 compared with the January result.

More than half of the participants expect an improvement of the German economy over the next six months. Therefore, the indicator currently does not support those who argue that the economy might face a "double-dip" with growth reversing in the second half of the year.

In February 324 analysts and institutional investors participated in the ZEW Financial Markets Survey which is conducted monthly by the Centre for European Economic Research (ZEW), Mannheim. The participants were asked about their medium-term expectations concerning economic activity and capital markets. The ZEW Indicator of Economic Sentiment is the balance between positive and negative expectations of the future economic development in Germany within a timeframe of six months.

In line with the positive expectations concerning the economy is the significant decline of analysts expecting further rate cuts by the European Central Bank. By now, 60 percent anticipate short term interest rates to remain unchanged over the next six months - in January a majority of analysts expected the ECB to cut rates once more.

Contact

Dr. Felix Hüfner, E-mail: huefner@zew.de

Volker Kleff, Email: kleff@zew.de