MANNHEIM (dpa-AFX) – The economic expectations of financial experts in Germany clouded over more than expected in May. The mood barometer of the Mannheim research institute ZEW fell by 14.8 points to minus 10.7 points compared to the previous month, as the Center for European Economic Research (ZEW) announced on Tuesday in Mannheim. On average, analysts had expected a decline to minus 5.0 points. For the first time since December, the ZEW indicator is back in negative territory. It was the third decline in a row.
“One reason for the decline in the sentiment indicator is the expectation that the ECB will raise interest rates even more,” commented ZEW President Achim Wambach. “A possible default by the United States in the next few weeks will also increase uncertainty about international economic developments.” According to Wambach, the German economy could slide into a slight recession.
The assessment of the economic situation deteriorated from a low level. It fell 2.3 points to minus 34.8 points. Experts had expected a sharper decline to minus 37.0 points.
“The higher interest rates, the still high inflation rates and the global economic environment that is deteriorating are pure poison for the German economy,” writes VP Bank chief economist Thomas Gitzel. “Although the German economy was still reasonably robust in view of the adverse circumstances, the recession is not yet off the table.” The latest weak economic data from China did not provide any favorable signs for German exports.
In the euro zone economic expectations also clouded over. The expectation indicator fell by 15.8 points to minus 9.4 points. The indicator for the situation, on the other hand, rose by 2.7 points to minus 27.5 points. The publication did not play a major role in the financial markets./jsl/bgf/jha/