ZEW Indicator of Economic Sentiment - Expectations Almost Unchanged

Research

The ZEW Indicator of Economic Sentiment for Germany fell by -0.7 points in April. However, compared with +63.4 points in March, the indicator's current level of 62.7 points is still well above its historical average of 35.3 points.

On the one hand, economic expectations may have been positively influenced by the increasing number of incoming orders, which signal a continuing upward trend in the German investment goods industry. In particular, the construction and automobile industry received a positive assessment from the financial market experts surveyed. On the other hand, expectations may have been negatively influenced by the risk of a general slowdown of the world economy and the high oil price.

"The expectations of financial market experts have stagnated at a high level. The only thing likely to further stimulate expectations at this stage would be economic policy measures to tackle the present challenges. The implementation of working groups is not enough", said ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.

Because of the flourishing export industry and an altogether positive development of German industrial production the experts surveyed take a more optimistic view of Germany's current economic situation this month. The corresponding indicator is up from -8.4 points to 2.9 points in April.

Economic expectations for the euro zone have stabilized. The indicator slightly decreased by -2.4 points and now stands at 58.7 points. This month the corresponding indicator for the current economic situation in the euro zone has increased by +12.3 points to 14.3 points.

Table corresponding to the ZEW Indicator of Economic Sentiment April 2006

316 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 from March 27 to April 10, 2006 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 horizontal line indicates the historical mean of the indicator.

Contact

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

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