German investor sentiment jumps ahead of federal elections
By Benjamin Chiou
Date: Tuesday 18 Feb 2025
(Sharecast News) - Investor morale in Germany saw a big uptick this month, with the removal of some domestic political uncertainty and rate cuts by the European Central Bank contributing to renewed optimism.
The ZEW economic research institute's indicator of economic sentiment jumped 15.7 points to 26.0 in February, up from 10.3 in January and well ahead of the consensus forecast of 15.0.
This was the highest level for the index in seven months and the biggest one-month increase over the past two years, ZEW said.
The current situation index also improved more than expected, albeit marginally, rising to -88.5 from -90.4, beating estimates of -90.0.
The news comes just days before a federal election in Germany on 23 February, with the CDU/CSU conservatives expecting to come out on top to the far-right Alternative for Germany (AfD) party polling in second place.
"Shortly before the day of the federal election, economic expectations have clearly improved in February. This rising optimism is probably due to hopes for a new German government capable of action," said Achim Wambach, the president of ZEW.
"Also, after a period of absent demand, private consumption can be expected to gain momentum in the next six months. And the recent move by the ECB to cut interest rates in response to sluggish economic activity in the Monetary Union is likely to have contributed to the better outlook for the construction industry."
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