Expectations Fall for German, Eurozone Economies

A significant decrease in expectations has been registered for the German economy that also reflects on the eurozone as a whole. The Indicator of Economic Sentiment from the Centre for European Economic Research (ZEW) dropped a considerable amount in August, 7.5 points, to a level of 10. This is significantly below the long-term average of 23.8 points. The indicator for the current economic situation in Germany increased slightly, however, and now stands at 86.7 points.

“The significant decrease of the ZEW economic sentiment indicator reflects the high degree of nervousness over the future path of growth in Germany,” said Professor Achim Wambach, president of ZEW. “Both weaker-than-expected German exports as well as the widening scandal in the German automobile sector, in particular, have helped contribute to this situation. Overall, the economic outlook still remains relatively stable at a fairly high level.”

Expectations for eurozone growth are slightly lower than those for Germany. The indicator for financial market experts’ expectations for such growth dropped by 6.3 points in August. However, the indicator for the current economic situation in the eurozone has increased since November of 2016 and now stands at its highest level since January 2008. It rose 9.7 points higher in August, ZEW said.

Another index that has contributed to the view that the German and eurozone economies are slowing down is the Markit Manufacturing Purchasing Managers’ Index for July, Wells Fargo Securities said in a recent report. After hitting highs in June, indexes for both Germany and the eurozone dipped marginally in July. A further decline may solidify the view of a slowing-down economy in the region, Wells Fargo said.

– Adam Fusco, associate editor

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