ZEW Indicator of Economic Sentiment April 2005 - Pessimism Returns

The ZEW Indicator of Economic Sentiment for Germany decreased by a substantial -16.2 points in April. At its current level of +20.1 points compared with +36.3 points in March the indicator is now significantly below its historical average of +34.4 points.

This strong decline is partly explained by disappointing incoming orders which failed to sustain hopes of a sustained recovery in economic activity in Germany. In conjunction with a slackening off in global economic activity, the pace of the economic upturn in Germany is expected to slow in the medium term. "The reform process must be pursued further in order to create confidence in sustainable economic recovery. The mediocre results of a job summit - themselves subsequently talked to death in parts - are nothing like adequate", comments ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.

As was the case in March, experts take a much more pessimistic view of the current economic situation in Germany with the indicator of the current economic situation declining from -66.0 to -73.0 points in April.

Economic expectations for the euro zone also worsen in April. The indicator loses -12.7 points compared with last month's figures and now stands at +24.6 points. The corresponding indicator for the current economic situation in the euro zone deteriorated from -27.8 to -32.8 points.

Contact

Volker Kleff, E-mail: kleff@zew.de

Dr. Sandra Schmidt, E-mail: s.schmidt@zew.de