- Prior 58.3
- Current conditions -62.9 vs – 67.3 expected
- Prior -65.9
I had to double check the number because of the huge deviation. This is much lower than expected as the lowest forecast was 30.0. The US-Iran war and the surge in energy prices have certainly played a major role here.
ZEW President Professor Achim Wambach said: “The ZEW Indicator has collapsed. The escalation in the Middle East spikes energy prices and increases inflationary pressure. This heightens the risk for the German economy that the emerging trend of economic recovery will slow down. How strong these effects will turn out depends on the intensity and the duration of the conflict. The financial market experts are sceptical that a quick resolution of the conflict will take place.”
German ZEW
WHAT IS THE ZEW INDEX
The ZEW Indicator of Economic Sentiment is an influential monthly survey that gauges the economic expectations of financial experts in Germany. It is considered a “leading indicator,” meaning it is used to gauge the future health of the German economy, the largest in the Eurozone, about six months in advance.
Unlike the Ifo Business Climate Index (which surveys company managers), the ZEW surveys up to 350 institutional investors and financial analysts (from banks, insurance companies, and financial departments). Experts are asked whether they expect the economic situation to improve, stay the same, or worsen over the next six months.
The index is a “diffusion index.” It is calculated by subtracting the percentage of pessimistic responses from the percentage of optimistic responses. If the index is above zero, it indicates that the majority of experts are optimistic about future growth. If it’s below zero, it signals prevailing pessimism.
