ZEW-Erste Group Bank Economic Sentiment Indicator for Central and Eastern Europe (CEE): Economic Expectations Almost Unchanged in Central and Eastern Europe – Major Decline in Inflation Concerns

The ZEW-Erste Group Bank Economic Sentiment Indicator for Central and Eastern Europe including Turkey (CEE) has slightly increased by 2.2 points to 20.9 points in May 2011. The indicator for the inflation concerns in the CEE region has displayed a double digit drop by 23.9 points in this month’s survey. This is the first decline of the indicator in this year and the largest decrease among all economies included in the survey.

The relaxation of inflation concerns is mainly due to a large drop of 22.0 points of the indicator for Poland. Several other CEE economies also display a double digit drop in inflation concerns – Romania, Hungary and Austria. The economic sentiment indicator for the CEE region and further financial market data have been surveyed monthly since 2007 by the Centre for European Economic Research (ZEW), Mannheim, with the support of Erste Group Bank, Vienna.

The economic expectations for the Eurozone on a six-month time horizon have improved in May as well. The respective indicator has increased by 5.4 points to a value of 3.6 points.

The indicator which reflects the assessment of the current economic conditions in the CEE region has slightly decreased by 1.3 points to 21.2 points in May.

The evaluation of the current economic situation in the Eurozone has also worsened in the current survey by 7.6 points. The respective indicator now stands at the minus 7.6 mark.

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

Zwetelina Iliewa, Phone +49 621/1235-144, E-mail iliewa@zew.de