The ZEW Indicator of Economic Sentiment for Germany has increased by 32.2 points in January 2012. The indicator now stands at minus 21.6 points. This is the highest level of the indicator since July 2011. Nevertheless, the indicator is still below its historical average of 24.5 points.

ZEW Indicator of Economic Sentiment January 2012

This month’s increase suggests that within the next six months German economic activity is likely to stabilize instead of deteriorating further. Improved economic data from the United States as well as the recent decline in yields from Spanish and Italian government bonds may have contributed to the indicator’s increase.

"Contrary to repeatedly expressed fears of a recession the assessment of the financial market experts gives reason for cautious optimism that Germany will only experience a dent in economic activity. The generous supply of liquidity by the ECB and the relatively affordable refinancing terms for Italy and Spain may have supported the improvement of this month’s sentiment. Nonetheless, the further development of the debt crisis remains a risk to economic growth," says ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.

The assessment of the current economic situation for Germany has improved slightly compared to the previous month. In January, the corresponding indicator has increased by 1.6 points to the 28.4 points-mark.

Economic expectations for the eurozone have increased by 21.6 points in January. The respective indicator now stands at minus 32.5 points. The indicator for the current economic situation in the eurozone has dropped by 7.7 points and now stands at minus 51.8 points.

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