Subdued Economic Outlook

After having already made a rather cautious start to 2019, companies in the German information economy have found that the economic situation has since cooled further in the first quarter of the year. This assessment is based on the latest reading of the ZEW Economic Sentiment Indicator for the Information Economy, which saw a decline from 66.4 points in the last quarter of 2018 to a reading of 64.0 points in the first quarter of 2019. The ZEW Economic Sentiment Indicator is the result of a survey among companies in the German information economy, conducted by ZEW – Leibniz Centre for European Economic Research in March 2019.

This drop in the sentiment indicator can largely be attributed to negative development in the business situation. Compared to the previous quarter, the corresponding sub-indicator fell by 8.1 points in the first quarter of 2019 and now stands at 60.1 points.

Unlike the business situation, expectations regarding economic development improved slightly in the second quarter of 2019, with the corresponding sub-indicator currently standing at 68.1 points. On balance, around 41 per cent of the surveyed firms anticipate rising revenues, while 32 per cent expect demand for their products and services to go up.

The information economy consists of the sub-sectors information and communication technologies (ICT), media service providers and knowledge-intensive service providers.

For the second time in a row, the economic climate has cooled somewhat for companies in the ICT sector. The sentiment indicator for this sub-sector dropped two points compared to the previous quarter, but still remains at a relatively high level, at 70.9 points. In contrast to the previous quarter, the business expectations in the ICT sector have improved considerably. Following a high reading in the previous quarter, the corresponding sub-indicator continued its growth by climbing an extra 7.1 points, reaching a total of 77.7 points.