ZEW Indicator of Economic Sentiment Economic Pessimism Continues

In March, the Indicator of Economic Sentiment for Germany, calculated as part of the ZEW Financial Market Survey, fell further. It currently lies at minus 10.4 points. Compared to the previous month, the indicator has declined by 4.3 percentage points. The proportion of those taking a pessimistic view of the German economy's further development has thus increased and now constitutes a quarter of those surveyed.

The ZEW Financial Market Survey is carried out on a monthly basis by the Centre for European Economic Research (ZEW) and includes around 400 analysts and institutional investors, who are 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.

In contrast to the Indicator of Economic Sentiment for Germany, the Indicator for the US has shown continued increases over the last two months. Overall, however, the development of the American economy is expected to be considerably worse than that of the German economy. Nevertheless, the majority of experts asked as part of the ZEW Financial Market Survey expect that the European Central Bank will soon follow suite and, like the US central bank, will reduce interest rates in order to prevent an economic downturn.

Contact          

Dr Felix Hüfner, E-mail: huefner@zew.de