Economic forecasts again less optimistic

Contrary to the message put forward by the Wirtschaftsjunioren Deutschland association (WJD), a current survey by the Centre for European Economic Research (ZEW) reveals less optimism on the German economy. In August the ZEW´ s economic indicator for Germany clearly fell by 20.7 points to -5.6 points, whereas in July it stood at 15.1 points. Thus the indicator is currently well below its historical average of 35.0 points.

The indicator´s development is a clear sign of the economy losing momentum on a 6-months-basis. The reason for this is said to be a weakening of the major aggregate demand factors which are export, investments and consumption. Exports are expected to be negatively affected by a weakening demand from the US market and a strong Euro. Plans by the German government to levy taxes on interest payments in the course of a corporate tax reform would make investments more expensive. Because of the coming VAT increase and high energy prices private consumption cannot act as engine for economic growth either.

The economic forecast for the Eurozone also deteriorated markedly in August. The EU indicator loses 16.8 as compared with the previous month and now stands at 1.3 points. The indicator for the current economic situation within the Eurozone, however, improved in August rising by 9.0 points to 34.9 points.

Additional figures and a table on the ZEW forecast from August are available online on the association´s webpage. GERMAN