Economic expectations for Germany drop to minus 55.3 points in 2022

The ZEW Indicator of Economic Sentiment, released by the Leibniz Centre for European Economic Research (ZEW), is a leading indicator for the German economy. Both the assessment of the economic situation and the expectations remain almost at the same level as in the July survey, according to a press release by ZEW.

Survey participants, who are experts from banks, insurance companies, and financial departments, were asked about their six-months expectations concerning the economy, inflation rates, interest rates, stock markets, and exchange rates in the Eurozone, United States, United Kingdom, and Japan and their expectations regarding oil prices.

The financial market experts’ sentiment concerning the economic development of the eurozone fell 3.8 points in August and currently stands at minus 54.9 points. The situation indicator increased by 2.4 points to a new level of minus 42.0 points.

Inflation expectations for the eurozone rose by 2.1 points, according to the survey. With a value of minus 23.5 points, the indicator remains clearly in negative territory, indicating a reduction of the high inflation rates within the next six months.

“The ZEW Economic Expectations decrease again slightly in August after a sharp drop in the previous month. The financial market experts therefore expect a further decline in the already weak economic growth in Germany. The still high inflation rates and the expected additional costs for heating and energy lead to a decrease in profit expectations for the private consumption sector. In contrast, the expectations for the financial sector are improving due to the supposed further increase in short-term interest rates,” said Dr. Michael Schröder, researcher at ZEW and head of the ZEW financial market survey.

ALCHEMPro News Desk (NB)