ZEW Indicator Signals Negative Trend in German Economic Sentiment

Highlights

• ZEW Indicator for Germany records significant decrease, indicating a decline in economic sentiment.
• Financial market experts predict further deterioration, attributing it to rising interest rates and weak export markets.
• Eurozone sentiment slightly worsens, highlighting challenges faced by the broader region.

Overview

The ZEW Indicator of Economic Sentiment for Germany shows a significant decrease in the latest July 2023 survey. At minus 14.7 points, it is 6.2 points lower than the previous month. The assessment of the economic situation in Germany has also worsened, with the corresponding indicator dropping by 3.0 points to a new value of minus 59.5 points.

Financial market experts predict a further deterioration in the economic situation, as indicated by the shifting ZEW Indicator into negative territory. Rising short-term interest rates in the eurozone and the USA, along with weak export markets like China, are cited as key reasons for the negative outlook. The industrial sectors are expected to bear the brunt of the economic downturn, with export-oriented industries experiencing substantial declines in profit expectations.

Regarding the eurozone, sentiment among financial market experts has slightly worsened in July, with the ZEW Indicator for economic development standing at minus 12.2 points, 2.2 points lower than the previous month. The situation indicator for the eurozone also decreased, reaching a new reading of minus 44.4 points, down by 2.5 points.

These findings reflect a growing concern among experts about the future economic trajectory, highlighting the challenges faced by Germany and the wider eurozone.