The Center for European Economic Research (ZEW), headquartered in Mannheim, Germany, announced the February results of the ZEW Economic Confidence Index, which measures the expectations of institutional investors and analysts for the next 6 months.
Accordingly, the index increased by 4.7 points in February compared to the previous month.
The index, which was 15.2 points in January, increased to 19.9 points this month. It was noteworthy that the index increased for the seventh consecutive month and reached its highest level since March 2023. Market expectation was that the index would drop to 17.3 points in February.
CURRENT SITUATION INDEX HAS DECREASED
The Current Situation Index in Germany decreased by 4.4 points in February compared to the previous month, falling to minus 81.7 points.
ZEW President Prof. Dr. In his assessment of the issue, Achim Wambach said, “The German economy is in a bad position. Participants’ assessment of the current economic situation has fallen to the lowest level since June 2020.”
Stating that economic expectations for Germany improved again in February, Wambach said, “More than two-thirds of the participants expect the ECB to reduce interest rates in the next six months in light of falling inflation rates. “Almost three-quarters of those surveyed expect the Fed to cut interest rates soon,” he said.
Analysts expect low interest rates to make loans for investments cheaper and stimulate the economy.
ING Global Macro Research Head and Germany Chief Economist Carsten Brzeski stated that the increase seen in Germany’s ZEW Economic Confidence Index in February shows that there is still light at the end of a very long tunnel.
Brzeski said, “Financial analysts see light at the end of the tunnel, even though this tunnel seems to never end. In February, the German ZEW index, which measures the evaluations and expectations of financial analysts regarding economic and financial developments, rose to 19 for the seventh consecutive month from 15.2 in January. “Due to the nature of the ZEW index, a weakening current assessment component almost automatically raises expectations. The further you fall, the easier it is to recover at some point,” he said.
Pointing out that any cyclical recovery in the German economy will be too weak to compensate for structural weaknesses, Brzeski said, “The ZEW index announced today is not capable of changing the basic scenario that there will be another year of recession in Germany.” said.
Financial market experts’ assessments of the economic development of the euro zone also increased in February.
The indicator in question increased by 2.3 points compared to the previous month, reaching 25 points in February.