Snap Elections and ECB Monetary Policy Grounds for Optimism

The ZEW Indicator of Economic Sentiment for Germany improved in the December 2024 survey. At 15.7 points, it is currently 8.3 points above the previous month’s value. In contrast, assessments of the current economic situation in Germany have changed only slightly. The corresponding indicator fell 1.7 points and is now at minus 93.1 points.

“With snap elections ahead in Germany and the resulting expectations of an economic policy encouraging private investment as well as the prospect of further interest rate cuts, the economic outlook is improving. Our daily analyses also show that after the meeting of the European Central Bank’s Governing Council on 12 December, experts still expect further interest rate cuts for the coming year. The fact that the majority of the survey respondents expect a stable or falling inflation rate in the eurozone supports this assessment. The experts appear to assess the recent rise in inflation as a temporary phenomenon,” comments ZEW President Achim Wambach on the survey results.

The financial market experts’ sentiment concerning the economic development in the eurozone is currently more positive at 17.0 points, i.e. 4.5 points higher than in November. Nevertheless, the assessment of the current economic situation in the eurozone is clearly deteriorating, with the situation indicator falling by 11.2 points to a new reading of minus 55.0 points.