ZEW Indicator of Economic Sentiment: Analysts Remain Optimistic

The ZEW Indicator of Economic Sentiment derived from the ZEW Financial Market Survey has increased in November and further continues to stabilize in positive territory. It is currently standing at +13.1 points compared to +9.8 points in the October survey.

Thus, it has not yet regained the level prior to September 11 (the replies in the September survey that were given prior to September 11 resulted in an indicator of +20.8). However, the recent development of the indicator shows that the influence of the terror attacks on the analysts' expectations is not long-term.

In November 313 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 con-cerning 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.

For several months the majority of analysts participating in the ZEW Financial Market Survey have expected the European Central Bank to cut rates sharply. Last week's ECB rate cut shows that the ECB is on its way to fulfill these expectations. This might support the positive sentiment among the analysts regarding the future economic development in Germany.

Contact

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