The ZEW Indicator of Economic Sentiment for Germany once again experienced a sharp decline in April 2018, dropping by 13.3 points compared to March and 26.0 points compared to February. The indicator currently stands at minus 8.2 points, falling far below the long-term average of 23.5 points. The assessment of the current economic situation in Germany decreased by 2.8 points, with the corresponding indicator currently standing at 87.9 points.
“The reasons for this downturn in expectations can mainly be found in the international trade conflict with the United States and the current situation in the Syrian war. The significant decline in production, exports and retail sales in Germany in the first quarter of 2018 is also having a negative effect on the future economic development,” says ZEW President Professor Achim Wambach.
The financial market experts’ expectations regarding economic development in the Eurozone also decreased considerably, with the corresponding indicator falling by 11.5 points to a current reading of merely 1.9 points. The indicator for the current economic situation in the Eurozone improved slightly in April. The indicator currently stands at 57.7 points, which corresponds to an increase of 1.5 points compared with the March result. The decline in economic sentiment regarding the Eurozone is likely to be down to the same factors as in Germany, with the figures for production and retail sales in the first quarter of 2018 turning out to be surprisingly negative. Furthermore, the trade conflict with the United States, together with the uncertainties resulting from the Syrian war regarding the relationship between Russia and the US were also having a negative impact on the economic expectations for the Eurozone.