Expectations Break Down

The ZEW Indicator of Economic Sentiment for Germany recorded a steep decline in August 2024. At 19.2 points, it is 22.6 points below the value from the previous month. The last time expectations deteriorated in a similar manner was July 2022. The assessment of the current economic situation in Germany also declined. The corresponding indicator fell by 8.4 points to a new value of minus 77.3 points.

“The economic outlook for Germany is breaking down. In the current survey, we observe the strongest decline of the economic expectations over the past two years. Economic expectations for the eurozone, the US and China also deteriorate markedly. As a result, especially the expectations for export-intensive German sectors decline. It is likely that economic expectations are still affected by high uncertainty, which is driven by ambiguous monetary policy, disappointing business data from the US economy and growing concerns over an escalation of the conflict in the Middle East. Most recently, this uncertainty expressed itself in a turmoil on international stock markets,” comments ZEW President Professor Achim Wambach, PhD on the survey results.

At 17.9 points, the financial market experts’ sentiment concerning the economic development of the euro area lost 25.8 points compared to July. The last time the indicator experienced a steeper decline was April 2020. In contrast, the situation indicator for the eurozone improved marginally, climbing 3.7 points to a new reading of minus 32.4 points.