German economic confidence weakened to a six-month low in July, survey data from the ZEW – Leibniz Centre for European Economic Research showed Tuesday.

The ZEW Indicator of Economic Sentiment declined sharply to 63.3 in July from 79.8 in the previous month. This was the lowest score since last January, when the score was 61.8 and also below economists’ forecast of 75.2.

On the other hand, the assessment of the current economic situation once again improved strongly and stood at 21.9 points in July, which was 31.0 points higher than in the previous month.

The current situation was rated similar to how it was at the beginning of 2019, with the corresponding indicator now being back in positive territory for the first time in two years.

“The economic development continues to normalize,” ZEW President Achim Wambach, said. In the meantime, the situation indicator for Germany has clearly overcome the coronavirus-related decline.

Regarding current expectations, Wambach said the financial market experts expect the overall economic situation to be extraordinarily positive in the coming six months.

The financial market experts’ sentiment concerning the economic development of the euro area also deteriorated in July. The corresponding index dropped 20.1 points to 61.2 in July.

Meanwhile, the indicator measuring the current situation surged 30.4 to 6.0 points in July.

Inflation expectations for the euro area dropped 10.0 points. However, more than 75 percent of the experts still expect inflation to rise further in the next six months.

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