Germany's investor sentiment partly recovered in August from a 'Brexit'-driven fall in the previous month despite the persistence of political and financial sector concerns, results of a closely watched survey showed Tuesday.
The ZEW Indicator of Economic Sentiment climbed to 0.5 from -6.8 in July, which was the lowest since late 2012, survey data from the Mannheim-based Centre for European Economic Research/ZEW revealed.
Economists had forecast a higher score of 2. The latest reading was also well below the long-term average of 24.2 points.
The current situation index of the survey rose to a seven-month high of 57.6, after dropping to 49.8 in July. The improvement exceeded economists' expectations for a 50.2 points score.
The monthly survey was conducted among 214 experts from banks, insurance companies and financial departments of different companies between July 29 and August 15.
"The ZEW Indicator of Economic Sentiment has partly recovered from the Brexit shock," ZEW President Achim Wambach said.
"Political risks within and outside the European Union, however, continue to inhibit a more optimistic economic outlook for Germany. Furthermore, uncertainty about the resilience of the EU banking sector persists."
In its monthly report released on Monday, the Bundesbank said the surprise 'Brexit' vote during late June is set to have limited impact on the German economy in the short term.
The bank also said that the strong exports are likely to continue in the third quarter as business expectations remained positive.
The biggest euro area economy grew a better-than-expected 0.4 percent in the second quarter, which was slower than the 0.7 percent expansion in the first three months of the year. Eurozone growth eased to 0.3 percent from 0.6 percent during the same period.
"On the basis of the (admittedly very loose) relationship between the headline ESI and annual German GDP growth, the survey points to a slowdown from Q2's rate of 1.7 percent to barely positive growth," Capital Economics said.
The ZEW survey also showed that Eurozone investor sentiment rose by 19.3 points to a score of 4.6. The current conditions index climbed 2.1 points to reach minus 10.3 points.
Citing the Eurozone trade data for June, released simultaneously on Tuesday, and the ZEW figures, economists at Capital Economics said the data did nothing to change their view that the European Central Bank needs to loosen policy further.
"We expect it to increase the pace of its asset purchases and perhaps also cut the deposit rate slightly at its next policy meeting on 8th September," Capital Economics said.
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April 24, 2026 15:15 ET Economics news flow was relatively light this week even as the conflict in the Middle East continued, raising concerns for policymakers. In the U.S., spending data, initial jobless claims and pending home sales were the highlights. Business confidence in the biggest euro area economy was in focus in Europe. Inflation data from Japan gained attention in Asia.