German ZEW Economic Sentiment dropped -8.6pts to -24.7 in July, missed expectation of -18.2. It’s also the lowest reading since August 2012 and well below the long term average of 23.2. Also, since the beginning of 2018, the index has dropped by a considerable -45.1 pts. Current Situation index dropped -8.2pts to 72.4, also missed expectation of 78.0.
ZEW President Professor Achim Wambach said in the release that “the current survey period has been marked by great political uncertainty. In particular, fears over an escalation of the international trade war with the United States have dampened the economic outlook. The positive news regarding industrial production, incoming orders and the labour market have been greatly overshadowed by the anticipated negative effects on foreign trade”.
Eurozone Economic Sentiment dropped -6.1pts to -18.7, well below expectation of -5.1. Current Situation index dropped -3.7pts to 36.2. ZEW also noted that as a result, the economic outlook for the Eurozone over the coming six months has worsened considerably. In accordance with the weaker economic outlook for both Germany and the Eurozone, inflation expectations also saw a noticeable drop compared to the previous month.
