The ZEW Indicator of Economic Sentiment for
Germany fell sharply in August 2014. The indicator has lost 18.5 points and now
stands at 8.6 points (long-term average: 24.6 points). Decreasing for the eighth
consecutive time, the indicator has reached its lowest level since December
2012. The current decline is the strongest since June 2012.
The Centre for European Economic Research (ZEW -
- Zentrum für Europäische Wirtschaftsforschung) in Mannheim is a nonprofit and
independent institute. It was founded in 1990 on the basis of a public-private
initiative in the federal state of Baden-Württemberg in co-operation with the
University of Mannheim.
ZEW said the decline in economic sentiment is
likely connected to the ongoing geopolitical tensions that have affected the
German economy by now. In particular, current figures on industrial production
and incoming orders suggest markedly reduced investment activities on the part
of German firms against the backdrop of uncertain sales prospects. Since the
economy in the Eurozone is not gaining momentum either, the signs are that
economic growth in Germany will be weaker in 2014 than expected.
The assessment of the current economic situation in Germany has decreased as
well. The respective indicator has lost 17.5 points and now stands at 44.3
The ZEW Indicator of Economic Sentiment for the Eurozone also declined
significantly in August. The indicator has lost 24.4 points compared to the
previous month, now standing at 23.7 points. The indicator for the current
economic situation in the euro area decreased in August by 2.3 points to a value
of minus 33.8 points.
222 analysts participated in the August-survey
which was conducted during the period 7/28-8/11/2014. Analysts were asked about
their expectations for the next 6 months.