Economic sentiment in Germany drops

Economic expectations in Germany have fallen, despite recent figures indicating a robust recovery.

The ZEW Indicator of Economic Sentiment for Germany, published by the Centre for European Economic Research (ZEW) in Mannheim, fell by 2.9 points this month.

The indicator stands at minus 7.2 points, after a reading of minus 4.3 points in September. This value is still below the historical average of 27 points.

The ZEW says its indicator dropped although Germany’s economic situation has once again “improved considerably” compared with the previous month. The ZEW’s corresponding indicator climbed by 12.7 points to 72.6 points. (article continues below)

Figures on industrial production and incoming orders indicate that German economic growth remains robust. Over the past couple of months, the ZEW says, Germany’s economy has recovered from the financial crisis with “exceptional growth rates”.

The ZEW says the decline in economic sentiment in October indicates that the rapid recovery is likely to slow down in the next six months. More than half of the financial market experts polled for the survey expect no change in the economic situation. Weak economic dynamics in America and some of the eurozone countries, however, are perceived as a significant risk.

Economic expectations for the eurozone as a whole dropped by 2.6 points, to 1.8 points. The indicator for the current economic situation in the eurozone improved by 5.2 points, to minus 1.1 points.