The unexpectedly significant increase in economic forecasts for the EEC is noteworthy.
Financial analysts are feeling more hopeful about Germany's economy, predicting potential additional interest rate reductions. The index predicting developments over the next half-year climbed by 9.5 points to 13.1 points in October, as per the ZEW, based on feedback from 161 experts. This marks the first increase following three successive drops.
Experts surveyed by Reuters anticipated an increase to just 10.0 points. However, the index for the current situation dipped again, falling 2.4 points to -86.9 points, which is the lowest figure since May 2020, when the COVID-19 outbreak led to a major economic downturn.
As per ZEW President Achim Wambach, "Given the poor assessment of the current situation, economic expectations for Germany are on the rise. This is a result of anticipated steady inflation rates and the possibility of further interest rate decreases by the ECB. Positive indicators from key German export markets are also contributing factors."
Economic forecasts for the eurozone, the USA, and China have all seen substantial improvements. "The enhanced optimism towards China could be due to the government's economic policies," stated Wambach. "These improvements may have played a role in boosting economic expectations for Germany as well."
At present, Germany's economy is technically in recession, with GDP decreasing by 0.1% in the second quarter, following a 0.2% growth in the first three months of the year. There's also a possibility of another drop in the recently completed summer quarter. Two consecutive quarters of decline classifies as a technical recession, as per experts.
Despite the current situation in Germany's economy being assessed negatively, leading to a decrease in the index for the current situation, financial analysts remain optimistic, anticipating potential additional interest rate reductions. This optimism stems from forecasted steady inflation rates, the possibility of further interest rate decreases by the ECB, and positive indicators from key German export markets.
