Economic expectations for Central and Eastern Europe including Turkey (CEE region) have slightly decreased in July 2016. In the current survey, the ZEW-Erste Group Bank Economic Sentiment Indicator for the CEE region has dropped by 3.9 points to a level of 11.9 points.
In July, the ZEW-CS Indicator for the economic sentiment in Switzerland has fallen by 13.5 points to a reading of 5.9 points. The Brexit vote is likely to be partly responsible for the decline in Swiss economic sentiment. The ZEW-CS Indicator, however, remains in the positive. The share of financial experts expecting the economic situation to improve still outweighs the share of surveyed experts expecting a decline in the economic situation. The ZEW-CS Indicator reflects the expectations of the surveyed financial market experts regarding the economic development in Switzerland on a six-month time horizon. It is calculated monthly by the Mannheim Centre for European Economic Research (ZEW) in cooperation with Credit Suisse (CS), Zurich.
In a column on VOX, the CEPR's London-based policy portal, ZEW innovation economists Paul Hünermund and Dr. Georg Licht call for a better coordination of national research policies in the EU and a consistent allocation of joint research budgets according to efficiency principles. Currently, policy makers try to strike a balance between promoting top quality research and achieving an even geographic distribution of research funds across Europe. This approach is, however, not consistent with the objective of promoting excellence in research.
The ZEW Indicator of Economic Sentiment for Germany decreased sharply in July 2016. The index has decreased by 26.0 points compared to the previous month, now standing at minus 6.8 points (long-term average: 24.3 points). This is the indicator’s lowest reading since November 2012.
"The Brexit vote has surprised the majority of financial market experts. Uncertainty about the vote’s consequences for the German economy is largely responsible for the substantial decline in economic sentiment. In particular, concerns about the export prospects and the stability of the European banking and financial system are likely to be a burden on the economic outlook," comments ZEW-President Professor Achim Wambach.
In a statement published on the European news platform EurActiv, Professor Friedrich Heinemann, head of the Research Department "Corporate Taxation and Public Finance" at the Mannheim Centre for European Economic Research (ZEW), has spoken in favour of implementing the provisions of the Stability and Growth Pact (SGP) without taking political considerations into account. If this is not done, the EU risks losing all credibility, also in future deficit procedures against possible populist governments.