Data published by the Leibniz Centre for European Economic Research (ZEW) showed that the indicator of German economic sentiment rose sharply in December, reaching its highest level since August. Overall, the economic outlook is improving, and experts still expect further interest rate cuts next year, as they assess the recent increase in inflation as a temporary phenomenon.
According to the report, the indicator of economic sentiment rose to 15.7 points compared to 7.4 points in November. The index remains in positive territory for the 14th month in a row. Economists had expected the index to fall to 6.4 points. Meanwhile, the index of the current economic situation fell to -93.1 points from -91.4 points in November. Consensus estimates suggested a decrease to -93.0 points.
“With snap elections ahead in Germany and the resulting expectations of an economic policy encouraging private investment as well as the prospect of further interest-rate cuts, the economic outlook is improving,” said ZEW President Professor Achim Wambach.
The data also showed that the indicator of economic sentiment in the eurozone rose to 17.0 points from 12.5 points in November. Economists had forecast a decline to 12.2 points. The indicator of the current economic situation fell by 11.2 points to -55.0 points, and inflation expectations fell to - 23.9 points from -13.4 points in November.