Economic expectations improve slightly

ZEW Indicator of Economic Sentiment

Mannheim, (PresseBox) - The ZEW Indicator of Economic Sentiment for Germany increased in December 2008 by 8.3 points. The indicator now stands at minus 45.2 points after minus 53.5 points in the previous month. This is still well below its historical average of 26.8 points.

The slight improvement of the ZEW economic sentiment indicator signals that the worries about a further aggravation of the recession in the mid of 2009 seem to be limited. The interest rate cuts of the central banks worldwide and the economic rescue packages should bolster the economic development.

"The German economy is slipping deeper into the recession. There is great uncertainty about the pattern of the business cycle in the next year. The analysts expect for the mid of 2009 an economic situation which is comparable to today. This might result from either a sideward movement or a rise from an even lower point in the business cycle. The government is well-advised to launch a growth package, which, for example, includes infrastructure projects, instead of igniting an economic straw fire by distributing consumption vouchers", says ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.

The assessment of the current economic situation in Germany further worsened in December 2008. The corresponding indicator dropped by 14.1 points to minus 64.5 points.

The economic expectations for the euro zone increased in December. The indicator rose by 7.9 points and now stands at minus 46.1 points. The indicator for the current economic situation in the euro zone dropped by 12.3 points and now stands at minus 71.2 points.

328 analysts and institutional investors participated in this month's ZEW Financial Markets Survey which is conducted on a monthly basis by the Centre for European Economic Research (ZEW), Mannheim. The participants were asked from November 24th to December 8th, 2008 about their medium-term expectations concerning economic activity and capital markets. The ZEW Indicator of Economic Sentiment shows the balance between positive and negative expectations regarding future economic activity in Germany within a timeframe of six months. The horizontal line indicates the historical mean of the indicator.

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