Second Year of Recession Causes Expectations to Fall

The ZEW Indicator of Economic Sentiment for Germany deteriorated in the January 2025 survey. At 10.3 points, it is currently 5.4 points below the previous month’s value. However, the assessment of the current economic situation in Germany has changed only slightly. The corresponding indicator increased by 2.7 points and is now at minus 90.4 points.

“The second consecutive year of recession caused economic expectations in Germany to fall. The year started with a noticeable decline in the corresponding indicator. This could be, among others, due to the recently released negative GDP growth figures and increasing inflationary pressure. A lack of private household spending and subdued demand in the construction sector continue to stall the German economy. If these trends continue in the current year, Germany will fall further behind the other countries of the Eurozone. There is also greater political uncertainty, driven by a potentially difficult coalition-building process in Germany and the unpredictability of the economic policy pursued by the new Trump administration,” comments ZEW President Achim Wambach, PhD on the recent results.

The financial market experts’ sentiment concerning the economic development in the Eurozone is currently more positive than in December, with a 1.0 point rise of the indicator to 18.0 points. The assessment of the current economic situation also remained stable: The situation indicator is minus 53.8 points and thus 1.2 points above the December reading.