Germany's economic outlook has received a significant boost, as reflected in the sharp rise of the economic sentiment indicator, which surged to 51.6 points in March 2025its most significant monthly increase since January 2023. This renewed optimism stems mainly from the German government's multi-billion-euro financial package, which strengthened confidence, particularly in the metal, steel, and mechanical engineering sectors.

Despite this surge in expectations, the assessment of the current economic situation remains bleak at minus 87.6 points, indicating that while sentiment has improved, tangible economic recovery is still elusive. The ECB's sixth consecutive interest rate cut has contributed to a more favourable financing environment, which could stimulate investment and consumer spending.

Beyond Germany, economic sentiment across the Eurozone has also strengthened, rising by 15.6 points to 39.8 points. However, like Germany, the current economic situation remains weak at minus 45.2 points, highlighting the gap between optimism and on-the-ground realities.

The strong rebound in sentiment suggests hope for an economic upturn, but structural challenges persist, taking the German RPI and RPI-P to minus 3. This means that economic activities are within the consensus of the German economy.

Economic sentiment is seen up to 35 in March from 26 in February.

The Mannheim-based Centre for European Economic Research (ZEW), asks German financial experts every month for their opinions on current economic conditions and the economic outlook for Germany (as well as other major industrial economies). The responses are synthesised into two simple indices that provide a snapshot of how the economy is seen to be performing.

The ZEW Indicator of Economic Sentiment is calculated from the results of the ZEW Financial Market Survey. The ZEW is followed closely as a precursor and predictor of the Ifo Sentiment Survey and as such is followed closely by market participants. The data are available around mid-month for the current month. The survey provides a measure of analysts' view of current economic conditions as well as a gauge of expectations about the coming six months. The latter measure tends to have the larger market impact and reflects the difference between the share of analysts that are optimistic and the share of analysts that are pessimistic. About 350 financial experts take part in the survey.