The ZEW Indicator of Economic Sentiment for Germany dropped to 10.3 in January 2025, down from 15.7 in December and well below the expected 15.3.
German investor morale falls more than expected
This decline reflects a contraction in the German economy for the second consecutive year in 2024, coupled with rising inflationary pressures. ZEW President Prof. Achim Wambach noted that weak private household spending and low demand in the construction sector continue to hinder economic growth. If these trends persist in 2025, Germany risks falling further behind other Eurozone countries.
Political uncertainty is growing
Additionally, political uncertainty is growing, driven by challenges in coalition-building and the unpredictability of the new Trump administration’s economic policies. Meanwhile, the assessment of Germany's current economic situation improved slightly, rising to -90.4 from -93.1.
