ZEW Indicator of Economic Sentiment December 2004 - Decline in Expectations Comes to a Halt

The ZEW Indicator of Economic Sentiment for Germany marginally increases by +0.5 points in December. Following 13.9 points in November it now stands at 14.4 points. The indicator is thus still well below its historical average of 34.5 points.

This month, positive and negative economic data are nearly equal. On the one hand, a continuing depreciation of the US-Dollar causes concern, because it could impair the competitiveness of German exports. On the other hand, the recent fall in oil prices gives confidence to the experts and prevents a further decrease of the indicator. "In view of the considerable changes in exchange rates and oil prices, future economic development is still risky; nevertheless, there is no reason to revise the expectations of a slight economic recovery in the next year", comments President Prof. Dr. Dr. h.c. mult. Franz.

Experts take a more negative view of this month's economic situation. The corresponding indicator declines from -57.8 points to -64.2 points.

Economic expectations for the euro zone further decline in December. The indicator looses -4.4 points compared with last month's figures and now stands at +17.7 points. The corresponding indicator for the current economic situation in the euro zone decreases from -25.8 points to -30.2 points.

300 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 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

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

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