ZEW Indicator of Economic Sentiment - Cautious Expectations

The ZEW Indicator of Economic Sentiment for Germany has dropped by 6.5 points in April 2011. The indicator now stands at 7.6 points. This value is below the indicator’s historical average of 26.6 points.

Compared to the answers of the financial market experts that were handed in at the end of the previous survey period after the Japanese earthquake catastrophe, expectations did not change significantly. However, compared to the indicator for the entire March survey, there was a considerable drop in expectations in April.

Two factors may have contributed to this decline. On the one hand, the current boom doesn’t leave much room for a further improvement of the current economic situation. On the other hand,  experts are more and more aware of the risks for the world economy resulting from the events in Japan and in the Arab world.

"Despite the positive economic development, considerable risks may result from increasing commodity prices. These price increases could lead to second-round effects that could then force the European Central Bank to adopt a more restrictive monetary policy," says ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.

The assessment of the current economic situation in Germany has improved in April. The corresponding indicator has risen by 1.7 points to 87.1 points. Economic expectations for the eurozone have decreased by 11.3 points in April. The respective indicator now stands at 19.7 points. The indicator for the current economic situation in the eurozone has dropped by 0.8 points and now stands at 5.6 points.

For further information please contact

Dr. Christian D. Dick, E-mail dick@zew.de

Frieder Mokinski,Phone +49 (0)621/1235-143, E-mail mokinski@zew.de