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The ZEW economic expectations are an important leading indicator for the economy in the coming six months, comparable to the Ifo business expectations. The ZEW regularly surveys around 300 experts from banks, insurance companies and the finance departments of large companies. The ZEW indicator thus captures the mood among German financial experts.
“The stress in the banking system is causing a significant damper,” commented Christoph Swonke, economic analyst at DZ BANK. “The burgeoning economic optimism is gone for the time being.” This shows that, in addition to the still high inflation and higher interest rates, sustained uncertainty in the banking sector would be a spanner in the works.”
The German Bundesbank assumes that German economic output will decline in the first quarter of 2023. The gross domestic product (GDP) will shrink. “All in all, German economic activity will probably fall again in the current quarter,” writes the Bundesbank in its monthly report for March. The decline is likely to be less than in the final quarter of 2022, when German economic output shrank by 0.4 percent compared to the previous quarter. If the gross domestic product (GDP) falls two quarters in a row, economists speak of a technical recession.
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According to the Bundesbank, industry and construction increased their production sharply in January. The construction mainly due to the mild weather. Adjusted for price increases, however, exports recovered only partially. In addition, persistently high inflation is slowing down consumer spending in Germany.
In addition to the expectations for the next six months, the ZEW also asks about the assessment of the current situation. The value for this sub-indicator also fell, from minus 45.1 to minus 46.5 points. The assessment of the current situation points to a recession. Now the expectations that this dent can be overcome quickly have also dampened.
The expectations for the economy in the euro zone also deteriorated in March from 30 to just ten points.
read too
The current banking crisis has put the brakes on the cautious mood of optimism in the German economy.
The ZEW Indicator of Economic Sentiment – an important leading indicator for economic development in the coming six months – surprisingly fell significantly in March.
Previously, the indicator had risen for five consecutive months. The experts surveyed also assessed the current situation as even worse than they already did.
The current banking crisis has abruptly halted the cautious spirit of optimism in the German economy. The ZEW index for economic expectations fell surprisingly sharply from 28.1 to 13.0 points in March. That shared that Leibniz Center for European Economic Research (ZEW) on Tuesday with Previously, the index had risen for five consecutive months. According to finanzen.net, most of the markets had only expected a slight decline to 23 points.
“The international financial markets are under a lot of pressure. This currently high level of uncertainty is also reflected in the ZEW economic expectations,” commented ZEW President Achim Wambach. “The assessment of the banks’ earnings trend has deteriorated considerably, but remains slightly positive. The assessments of the insurance industry are also declining significantly,” says Wambach.
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The ZEW economic expectations are an important leading indicator for the economy in the coming six months, comparable to the Ifo business expectations. The ZEW regularly surveys around 300 experts from banks, insurance companies and the finance departments of large companies. The ZEW indicator thus captures the mood among German financial experts.
“The stress in the banking system is causing a significant damper,” commented Christoph Swonke, economic analyst at DZ BANK. “The burgeoning economic optimism is gone for the time being.” This shows that, in addition to the still high inflation and higher interest rates, sustained uncertainty in the banking sector would be a spanner in the works.”
The German Bundesbank assumes that German economic output will decline in the first quarter of 2023. The gross domestic product (GDP) will shrink. “All in all, German economic activity will probably fall again in the current quarter,” writes the Bundesbank in its monthly report for March. The decline is likely to be less than in the final quarter of 2022, when German economic output shrank by 0.4 percent compared to the previous quarter. If the gross domestic product (GDP) falls two quarters in a row, economists speak of a technical recession.
read too
According to the Bundesbank, industry and construction increased their production sharply in January. The construction mainly due to the mild weather. Adjusted for price increases, however, exports recovered only partially. In addition, persistently high inflation is slowing down consumer spending in Germany.
In addition to the expectations for the next six months, the ZEW also asks about the assessment of the current situation. The value for this sub-indicator also fell, from minus 45.1 to minus 46.5 points. The assessment of the current situation points to a recession. Now the expectations that this dent can be overcome quickly have also dampened.
The expectations for the economy in the euro zone also deteriorated in March from 30 to just ten points.
read too