ZEW European Union Economic Sentiment Indicator

ZEW Economic Sentiment Indicator is calculated monthly by the Center of European Economic Research (Mannheim, Germany) on the basis of the surveys of up to 350 analysts from banks, insurance companies and financial departments of corporations.

Experts are asked to express an assessment of actual economic conditions and six-month expectations concerning economic conditions, inflation rates, near-term and long-term interest rates, stock markets, exchange rates of euro against other major currencies, and oil prices. Questions concern separately situations in Germany, France, Italy and the eurozone as a whole. The indicator is also calculated for the US, Japan and the UK.

The survey participants provide the qualitative rather than quantitative evaluation, i.e. whether the parameter may grow, fall or remain unchanged. The index is calculated as the difference between positive and negative forecasts. For example, if 30% of participants expect the economic situation to improve, and 40% expect it to deteriorate, then ZEW Economic Sentiment Indicator would take a value of -10. The positive value means that the share of optimists is higher than the share of pessimists, and vice versa.

The index reflects the sentiment of institutional investors. Index growth means favorable expectations. This allows forecasting growth of investments made into the economy of the eurozone. This may affect euro quotes positively.