By Miranda Murray
BERLIN (Reuters) – German investor expectations rose unexpectedly in September, the ZEW research institute said on Tuesday, in a sign of cautious optimism despite the economy’s poor performance compared to other Group of Seven (G7) nations.
The ZEW’s economic sentiment index, which looks at mid-term expectations, rose to 37.3 points from 34.7 points in August, beating analysts’ forecasts for 26.3 points.
“Financial market experts are cautiously optimistic and the ZEW indicator has stabilised, but the economic situation has worsened,” said ZEW president Achim Wambach.
The index assessing the current economic situation darkened, dropping 1.4 points more than expected to -76.4 in September from -68.6 the month before.
“There are still considerable risks, as uncertainty about the U.S. tariff policy and Germany’s ‘autumn of reforms’ continues,” said Wambach.
Given the situation globally and domestically, the improved expectations seem to have “somehow fallen from the sky,” said Hauck Aufhaeuser Lampe private bank economist Alexander Krueger.
“It remains to be seen whether companies will confirm the analysts’ positive outlook,” he added, warning that as long as the general conditions in Germany do not change, hopes for an economic recovery are likely to fizzle out.
Helaba economist Ralf Umlauf said the rise in expectations was a reason to hope that an economic upturn would start in coming quarters.
GERMANY LAGS G7 ECONOMIES IN GROWTH
Germany is the only one of the G7 economies that did not grow in the last two years as a series of challenges have stymied recovery plans, most recently U.S. President Donald Trump’s 15% tariffs on most EU goods that kicked in last month.
Leading economic institutes trimmed their 2025 growth outlook for the German economy earlier this month on dampened hopes that Chancellor Friedrich Merz’s new government – and a massive spending surge – could quickly turn things around.
The sentiment score is based on responses from 182 analysts and institutional investors from September 8-15 who were asked about mid-term expectations.
Within a range of minus 100 to plus 100, the score measures expectations on the country’s future economic development.
(Reporting by Ludwig Burger and Miranda Murray; Editing by Andrew Cawthorne)
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