German Economic Confidence Strongest Since 2015

German economic confidence strengthened in May as the country began to partially withdraw the lockdown imposed to slow the spread of the coronavirus, or Covid-19, survey data from the ZEW – Leibniz Centre for European Economic Research showed Tuesday.

The ZEW Indicator of Economic Sentiment rose 22.8 points to 51.0 in May. This was the strongest since April 2015 and above economists’ forecast of 32.0.

However, the assessment of current economic situation continued its downward trend. The corresponding index fell to -93.5 from -91.5 a month ago. The expected score was -88.0.

Coming from a very low point, it is no surprise that the future looks more optimistic. It is simply in the technical nature of the index, which is a relative assessment of future developments vis-à-vis the current situation, Carsten Brzeski, an ING economist, said.

“Optimism is growing that there will be an economic turnaround from summer onwards,” ZEW President Achim Wambach, said.

Financial market experts expect economic growth to pick up pace again in the fourth quarter of 2020. However, the catching-up process will take a long time, Wambach added. Only in 2022 will economic output return to the level of 2019.

The financial market experts’ sentiment concerning the Eurozone economic development also improved in May. The economic confidence index climbed 20.8 points to 46.0 in May.

By contrast, the indicator for the current economic situation fell by 1.1 points to minus 95.0 points.

Financial market experts expect inflation to ease further over the next six months. The inflation indicator came in at minus 18.7 points in May.

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