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EUR German ZEW Economic Sentiment

German ZEW Economic Sentiment – April 2025 Update
In April 2025, Germany's ZEW Economic Sentiment Index plunged from 51.6 to -14.0, marking a drop of 65.6 points — the steepest fall since the onset of the Russia–Ukraine war in 2022.

📉 Main Reasons Behind the Decline:
Unpredictable U.S. Trade Policies:
New 20% tariffs imposed by the Trump administration on EU imports (especially steel, aluminum, and cars) shocked Germany's export-driven economy.
(Source: welt.de)

Widespread Corporate Concerns:
According to the ZEW survey, over 80% of German firms in manufacturing and IT sectors expect these tariffs to negatively impact the economy.
(Source: reuters.com)

⚠️ Current Economic Conditions:
Assessment of Current Situation:
Despite the drop in sentiment, the current conditions index rose by 6.4 points to -81.2, showing a slight improvement.

Growth Outlook:
The German government has downgraded its 2025 growth forecast to 0.0%, citing trade tensions and falling exports.

"This is still a far cry from the 'pragmatic' version of Trump that markets were pricing in as the baseline on Inauguration Day, but it’s enough to prevent growth and debt-related bearish bets on the dollar from mounting."

"There are reasonable doubts about markets’ readiness to rebuild strategic dollar positions just yet, and time might be needed to reinstall market confidence in the dollar as a safe-haven asset. At the same time, EUR/USD remains overvalued by 2% in the short term according to our estimates, and more indications that Trump has switched to a market-pleasing mode can force more trimming of the risk premium."