ZEW Indicator of Economic Sentiment: Expectations Decline

The ZEW Indicator of Economic Sentiment for Germany declined in April 2008 by 8.7 points and now stands at minus 40.7 points after minus 32.0 points in the previous month. This is still well below its historical average of 30.0 points.

Economic expectations were affected by the extraordinary high price pressure in Germany this month. High rates of inflation reduce the available income of consumers and, hence, weaken private consumption. Low numbers of incoming orders of German companies point to slower growth in Germany as well.

"The slight optimism of the financial market experts last month seems to be only a temporary phenomenon. New record highs of the euro and the oil price have reduced expectations again. However, at the moment there is no reason for exaggerated pessimism. A growth rate for Germany of 1.7 percent this year is still realistic", said ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.

The assessment of the current economic situation in Germany improved slightly in April. The corresponding indicator increased by 1.1 points to 33.2 points.

Economic expectations for the euro zone worsened in April. The indicator decreased considerably by 9.8 points and now stands at minus 44.8 points. The indicator for the current economic situation in the euro zone dropped by 3.9 points and now stands at 15.5 points.

For further information please contact

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

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