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German ZEW Indicator of Economic Sentiment dipped in July; Current situation positive - - expectations drop
By Finfacts Team
Jul 13, 2010 - 12:35:39 PM
The German ZEW Indicator of
Economic Sentiment dipped 7.5 points in July 2010. The
indicator now stands at 21.2 points after 28.7 points in the
previous month. This value is below the indicator's historical
average of 27.4 points.
This is a stark contrast to the
economic situation. Positive data on industry activity show the
favourable development of the German economy during the second
quarter 2010. This may have contributed to the further
improvement of the assessment of the current economic situation
by the financial market experts in July. For the first time
since July 2008 this indicator turns positive. The considerable
improvement in the economic situation together with the decline
in expectations signals that - until the end of this year - the
potential for further improvements of the German economy seems
to be widely used up. Particularly the crisis in sovereign debt
and the resulting need for consolidation of budgets in various
countries seem to have contributed to the subdued economic
expectations.
"Contrary to the positive assessment of the current economic
situation financial experts expect that the dynamics in German
business activity will slow down towards the end of this year
due to still existing uncertainties regarding the handling of
the crisis of financial markets and the crisis of sovereign
debt," says ZEW President Prof. Wolfgang
Franz.
Once again, the assessment of the current economic situation
in Germany improves considerably compared to the previous month.
In July the corresponding indicator rises by 22.5 points to 14.6
points. The economic expectations for the euro zone decline by
8.1 points in July. The respective indicator now stands at 10.7
points. The indicator for the current economic situation in the
Eurozone improves by 14.3 points and now stands at minus 26.5 points.
Some 287 analysts participated in
the July-survey which was conducted during the period 06/28-07/12. Analysts were
asked about their expectations for the next 6 months.
ZEW (Zentrum für Europäische Wirtschaftsforschung/Centre
for European Economic Research) is based in Mannheim.
