German ZEW Economic Confidence At 7-Month Low

Germany’s economic sentiment deteriorated to a seven-month low in July as financial market experts expect further economic downturn in the face of more monetary policy tightening, results of a closely watched survey showed Tuesday.

The Indicator of Economic Sentiment declined more-than-expected to -14.7 in July from -8.5 in June, survey data from the ZEW-Leibniz Centre for European Economic Research showed.

This was the lowest since December 2022 and also worse than economists’ forecast of -10.0. The score has remained negative for the third month in a row.

Similarly, experts’ assessment of the current economic situation weakened in July. The corresponding indicator dropped 3 points to -59.5.

Financial market experts forecast further deterioration in the economic situation by the year-end largely due to rising short-term interest rates in the US and euro area, ZEW President Achim Wambach said.

Moreover, experts cited relatively weak conditions in the major export markets, especially China, as another factor for subdued outlook.

“The industrial sectors are likely to bear the brunt of the anticipated economic downturn, with profit expectations for these export-oriented industries experiencing a substantial decline once again,” Wambach added.

The survey showed that sentiment concerning the economic development in the euro area dropped slightly in July. The economic confidence index fell 2.2 points to -12.2. The current situation indicator also dropped 2.5 points to -44.4.

The behavioral research institute Sentix on Monday said that the investor confidence deteriorated notably in July. The think tank said situation in Germany remained particularly dramatic.

The International Monetary Fund forecast the largest eurozone economy to shrink 0.1 percent this year.

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