ZEW Indicator of Economic Sentiment - Clear Rise in Expectations

The ZEW Indicator of Economic Sentiment for Germany increases by a remarkable +22.9 points in December. Compared with +38.7 points in November, the indicator's

current level of +61.6 points is far above its historical average of +34.5 points.

An important contributor to optimism is German companies' increased investment confidence which is reflected, among other things, in the increasing domestic order intake reported by suppliers of investment goods. Thanks to the euro-dollar exchange rate and the broad dynamics of the world economy, export prospects for the next six months are positive, too. As opposed to previous surveys, uncertainty about Germany's future economic policy is now no longer an issue of dispute.

"The willingness to invest, an important pillar of domestic demand, seems to have revived. This revitalization will however only lead to higher employment, if the economic upswing is accompanied by reforms that make the labour

market more flexible and lead to lower corporate taxes, as well as the reform of social security systems and the

consolidation of the fiscal budget", said ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.

After a further increase in domestic industry production, the experts surveyed again take a much more optimistic view of Germany's current economic situation. The corresponding indicator is up from -55.2 points to -44.4 points in

December.

Economic expectations for the euro zone have also improved in December. The indicator gains +11.2 points

compared with last month's figures and now stands at +51.2 points. The corresponding indicator for the current economic situation in the euro zone increases by +8.7 to -16.8 points.

317 analysts and institutional investors participated in this month's ZEW Financial Markets Survey which is conducted on a monthly basis by the Centre for European Economic Research (ZEW), Mannheim. The participants were asked from November, 28 to December, 12 about their medium-term expectations concerning economic activity and capital markets. The ZEW Indicator of Economic Sentiment shows the balance between positive and negative expectations regarding future economic activity in Germany within a timeframe of six months. The solid line indicates the historical mean of the indicator.

Contact

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

Matthias Köhler, E-mail: koehler@zew.de