German ZEW Expectations Retreat Again in July

6 July 2021

By David Barwick – FRANKFURT (Econostream) – The forward-looking ZEW German economic sentiment indicator retreated in July for the second month in a row, declining 16.5 points to 63.3, economic research institute ZEW said on Tuesday.

‘Expectations for the next six months are thus still at a very high level’, ZEW commented. The index had hit a 20-year high of 84.4 in May.

As in June, despite the decline in expectations, financial market participants once again assessed the current situation much more positively, as the subindex climbed another 31.0 points to 21.9. That implies an assessment similar to that at the beginning of 2019, ZEW noted.

‘The normalisation of economic developments continues’, ZEW President Achim Wambach said in a press release ‘The situation indicator for Germany has now clearly left the Corona-induced decline behind. … The financial market experts therefore expect an above-average positive macroeconomic situation in six months' time.’

For the euro area as a whole, survey respondents were also clearly less optimistic, with that index down 20.1 points to 61.2. The indicator for the current economic situation in the euro area was up 30.4 points to 6.0.

Eurozone inflation expectations captured by the survey were down 10.0 points to 79.6. ‘However, more than 75% of the experts still expect inflation in the euro area to rise further in the next six months’, ZEW said.