Expectations Decline Sharply

The ZEW Indicator of Economic Sentiment for Germany recorded a significant decline in the current May 2023 survey. At minus 10.7 points, it is 14.8 points below the previous month’s value. This means that for the first time since December 2022, the ZEW Indicator is back in negative territory. The assessment of the economic situation in Germany also decreased. The corresponding indicator lost 2.3 points and now stands at a new value of minus 34.8 points.

“The ZEW Indicator of Economic Sentiment has once again fallen sharply. The financial market experts anticipate a worsening of the already unfavourable economic situation in the next six months. As a result, the German economy could slip into a recession, albeit a mild one. The sentiment indicator decline is partly due to expectations of further interest rate hikes by the ECB. Additionally, the potential default by the United States in the coming weeks adds uncertainty to global economic prospects,” comments ZEW President Professor Achim Wambach on the survey results.

The financial market experts’ sentiment concerning the economic development of the eurozone also worsened considerably in May and currently stands at minus 9.4 points, 15.8 points below the previous month’s value. The situation indicator for the eurozone improved, rising 2.7 points to a new reading of minus 27.5 points.