German ZEW outlook recovers from Brexit shock

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Following a sharp decline in June, the six month economic outlook for the German economy recovered in July.

The ZEW index for July increased to 0.5 basis point, representing a +7.3 bsp increase compared to the previous month. The assessment of the current situation in Germany also improved to 57.6 bsp, a month-on-month increase of 7.8.

Similarly, the outlook for the eurozone improved to +4.6 bsp, marking a 19.3 bsp improvement. The assessment of the current economic situation in the Eurozone remains weak at -10.3 bsp, although it recovered by 2.1 bsp compared to the previous month.

“The ZEW economic outlook recovered gradually from the Brexit shock, but geopolitical risks, both inside and outside the EU continue to dampen a more optimistic outlook for Germany. At the same time, uncertainty on the resilience of the European banking sector persists” comments ZEW president Achim Wambach.

The release of the montly ZEW index, which is based on a survey among 214 analysts and institutional investors, follows stronger than anticipated GDP figures for Germany. Over the second quarter of 2016, German GDP rose by 0.4%.