Germany's financial markets experts increasingly optimistic for the economy

Germany's financial market expectations for the economy improved significantly in the first month of the year. The economic expectations indicator published by the Centre for European Economic Research (ZEW) in Mannheim, jumped to 51.7% in January 2022 from 29.9% in December 2021. This is the highest figure since last July.

The sentiment towards the current economic conditions in Euro Area's biggest economy, however, worsens, with the respective index declining to -10.2% from -7.4% in December 2021. This is the fourth decrease in a row.

The ZEW Indicator is constructed as the difference between the percentage share of analysts who are optimistic and the share of analysts who are pessimistic for the German economy. The participants in the survey are up to 350 financial market experts.

The German financial markets experts mostly expect that the long term interest rates will grow

The breakdown of the fresh data provides further insight into the sentiment among Germany's leading financial pundits. In terms of the current conditions, the biggest share of respondents is the one of those who consider the situation "normal" (60.2%). This sheds a more positive light on the dynamic of the index, although it is still in the negative territory and keeps declining.

Further curious findings include the persistent expectations that inflation in Germany will decrease. 61.4% of the respondents share this opinion, while only 18.7% think that the prices will increase. The remaining 19.9% expect no change in inflation. On the other hand, the German financial markets experts mostly expect that the long-term interest rates will grow.

The ZEW survey covers also the sectoral expectations, with the most positive forecasts being expressed for the banks and insurance industries. More pessimistic is the sentiment for information technologies.

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