German economic sentiment weakened unexpectedly in June but financial market experts’ assessment of current situation improved sharply, survey data from the ZEW – Leibniz Centre for European Economic Research showed Tuesday.

The ZEW Indicator of Economic Sentiment dropped to 79.8 in June from 84.4 in the previous month. The score was forecast to rise to 86.0.

Meanwhile, assessment of the current economic situation improved significantly in June with the index rising to -9.1 from 40.1 a month ago.

The assessment of the economic situation is now back to the pre-pandemic level of August 2019. Due to the very high economic expectations, the outlook is now much more positive than in summer 2019, the survey showed.

The decline in expectations is probably largely due to the considerably better assessment of the economic situation, which is now back at pre-crisis levels, ZEW President Achim Wambach, said.

The financial market experts therefore continue to expect a strong economic recovery for the next six months, Wambach added.

Sentiment concerning the economic development of the Eurozone also decreased in June. The corresponding index dropped 2.7 points to 81.3 points. Meanwhile, the indicator for the current economic situation climbed 27.0 points to minus 24.4 points.

Inflation expectations in the currency bloc rose by 2.0 points to a new value of 79.6 points. Almost 84 percent of the experts expect the inflation rate in the euro area to increase further in the next six months.

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