ZEW-Erste Group Bank Sentiment Indicator for Central and Eastern Europe (CEE) - Weaker Economic Expectations for Turkey Weight on CEE Sentiment

The ZEW-Erste Group Bank CEE Indicator for Central and Eastern Europe including Turkey (CEE region) has dropped by 6.5 points to 16.2 points in January 2011. The economic expectations for the CEE region on a six months time horizon are mostly influenced by the cautious expectations for Turkey. The economic expectations for the CEE region and other financial market data are surveyed monthly since 2007 by ZEW, Mannheim, with the support of Erste Group Bank, Vienna.

The sentiment indicator for Turkey has declined by 9.0 points to 12.3 points in the current survey.The expectations of the financial market experts surveyed by ZEW and Erste Group Bank are in line with the forecasts of leading economists who also expect a weaker economic development for Turkey in 2011 in comparison to the previous year. The economists believe that the high current account deficit can be accounted as the main risk for the development of Turkey’s economy.

The evaluation of the current economic situation in the CEE region has worsened slightly in January. The respective indicator has decreased by 2.0 points to 20.0 points.

The indicator reflecting the economic expectations for the Eurozone within the next six months has increased significantly by 18.4 points and achieves a positive value of 16.7 points. The assessment of the current business cycle in the Eurozone has improved also considerably by 15.1 points and reaches a value of minus 14.0 points.

Information concerning further indicators of the CEE region, the Eurozone, individually analysed CEE countries or Austria can be found in the current Financial Market Report CEE. The answers of all survey participants are taken into account for the calculation of the indicators for the CEE region, the Eurozone and Turkey. The answers of the Turkish survey participants are not taken into account for the calculation of the indicators for the individual CEE countries and Austria as their high participation share in the survey could cause significant biases in the survey results.

Survey Procedure and Methodology

The Financial Market Survey CEE is a survey carried out among financial market experts by the Centre for European Economic Research in Mannheim (ZEW) and the Erste Group Bank AG Vienna. The goal of this survey is to develop indicators describing the economic conditions in Central and Eastern Europe (CEE) as well as in Austria.

The CEE region observed in the survey consists of Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia and since October 2010 of Turkey.

The financial experts are questioned on their evaluation of the current business situation, the medium-term prospects of the respective economies and their expectations as to the development of the inflation rate, the short- and long-term interest rates, the exchange rates and stock prices on a six months’ time horizon. The analysts’ assessments reflect the qualitative direction of the estimated changes. The monthly "Financial Market Report CEE" contains the results for every CEE country and for Austria in detail.

For further information please contact

Dr. Mariela Borell, Phone +49 (0)621/1235-144, E-mail borell@zew.de