ZEW Indicator of Economic Sentiment January 2005 - Positive Outlook at the Beginning of the Year

The ZEW Indicator of Economic Sentiment for Germany clearly increases by 12.5 points in January. It now stands at +26.9 points following +14.4 points in December. Despite this positive development, the indicator is still below its historical average of +34.4 points.

It seems as if the optimistic expectations of German retailers after the better than expected Christmas sales are one substantial reason for growing confidence among financial market experts. "These are positive signs at the beginning of the year. We have every reason to believe that consumption and investment will be picking up", comments ZEW-President Prof. Dr. Dr. h.c. mult. Wolfgang Franz. In addition, the exchange rate of the euro and the oil price, which - contrary to some fears - have not risen during the survey period, have contributed to increasing optimism.

Experts take a more positive view of the economic situation in the current month. The corresponding indicator rises from -64.2 points to -61.2 points in January.

Economic expectations for the euro zone also improve in January. The indicator gains 12.2 points compared with last month's figures and now stands at +29.9 points. The corresponding indicator for the current economic situation increases from -30.2 points to -30.0 points.

305 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