German ZEW Expectations Retreat in June, But Current Situation Seen Far Better

8 June 2021

By David Barwick – FRANKFURT (Econostream) – The forward-looking ZEW German economic sentiment indicator retreated in June from the previous month’s 20-year high, declining 4.6 points to 79.8, economic research institute ZEW said on Tuesday.

However, financial market participants again assessed the current situation much more positively, as the subindex soared 31.1 points to -9.0.

‘The economic situation in Germany is now assessed as it was before the Corona pandemic in August 2019’, ZEW said. ‘Due to the very high economic expectations, the outlook is now much better than in summer 2019.’

‘The economic recovery is progressing’, said ZEW President Achim Wambach in a press release. ‘Although the ZEW economic sentiment indicator fell in June, it remains at a very high level. The decline in expectations is probably largely due to the considerably better assessment of the economic situation, which has now risen to pre-crisis levels. The financial market experts therefore continue to expect a strong economic recovery for the next six months.’

For the euro area as a whole, survey respondents were also somewhat less optimistic, with that index down 2.7 points to 81.3. The indicator for the current economic situation in the euro area was up 27 points to -24.4.

Eurozone inflation expectations captured by the survey were up 2.0 points to 79.6. ‘Almost 84% of the experts expect inflation in the euro area to continue to rise over the next six months’, ZEW said.