Despite the budget crisis, stock market professionals are surprisingly more optimistic about the prospects for the German economy. The barometer for assessing the economy in the next six months rose by 3.0 points to plus 12.8 points, as the Mannheim Center for European Economic Research (ZEW) announced on Tuesday in its survey of 161 analysts and investors. This is the fifth increase in a row, meaning the barometer is now at its highest level since March 2023. Economists surveyed by the Reuters news agency, however, had expected a decline to 8.8 points.
At the same time, the assessment of the current situation has stabilized somewhat: this barometer rose by 2.7 points, but remains well in negative territory at minus 77.1 points. “Despite the current budget crisis, the assessment of the situation and economic expectations for Germany have once again increased slightly,” said ZEW President Achim Wambach. The fact that the proportion of respondents who expect the European Central Bank (ECB) to cut interest rates in the medium term has doubled has contributed to this. “This in turn is good news for the German construction industry, for which we are seeing significantly more optimistic expectations this month,” said Wambach.
Lower interest rates make loans cheaper, for example for investments – and can thus stimulate the economy. With reference to the debt brake, the Federal Constitutional Court has decided that the 60 billion euros originally approved as a Corona loan may not be subsequently reallocated for investments in climate protection and the modernization of the economy. This leaves a billion-dollar hole in the federal budget. The German economy currently has one foot in recession. It shrank by 0.1 percent in the summer and would slip into a so-called technical recession if it fell further in the current quarter.