German Economic Research Center (ZEW) reports that short-term expectations of financial analysts and institutional investors have improved in December, with the corresponding index rising by 8.3 points to 15.7, a significant improvement.
However, the assessment of the current economic situation has slightly worsened. The current situation indicator for Germany fell by 1.7 points to -93.1, indicating a challenging economic environment.
In the Eurozone, the expectations of financial experts for the economic development have increased by 4.5 points to +17.0, driven by the anticipation of a business-friendly economic policy in Germany following the early elections, as well as the prospect of further interest rate cuts. In contrast, the assessment of the current economic situation in the Eurozone has significantly deteriorated, with the current situation indicator dropping by 11.2 points to -55.0.
“The early elections in Germany, with the expectation of a business-friendly economic policy, and the prospect of further interest rate cuts, are creating a more positive economic outlook” commented ZEW President Achim Wambach. The daily assessments also showed that experts expect further interest rate cuts in the new year, following the ECB’s December meeting. “This assessment is supported by the fact that most respondents expect a stable or declining inflation rate in the Eurozone, suggesting that they view the recent inflation increase as a temporary phenomenon” Wambach added.