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ZEW Continues to Improve Despite Dismal Current Conditions

Germany's ZEW investor sentiment has improved for the seventh consecutive month, exceeding expectations and sparking optimism that Europe's largest economy is on the path to recovery as decreasing inflation paves the way for potential interest rate reductions.

The ZEW institute's expectations index rose to 19.9 in February from 15.2 in January, surpassing the consensus forecast of 17.5. This uptick comes despite a drop in the current conditions measure to its lowest level since mid-2020.

Our Take: The outlook for the German economy continues to brighten. Although it remains to be seen whether this positive trend will hold in the coming months, we are hopeful that the economy has reached its nadir and that activity will begin to pick up, albeit gradually.


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