Germany's economic outlook saw a sharp turnaround in June 2025, with the indicator of economic sentiment surging to 47.5, a leap of 22.3 points from the previous month, its most significant gain in over a year. While current conditions remain deeply negative at minus 72.0 (up from minus 82), the 10-point improvement marks the strongest monthly rise since April 2023. This suggests a growing belief that Germany may finally be emerging from its three-year economic stagnation.

Rising investment, consumer demand, recent ECB interest rate cuts, and expansionary fiscal signals from the new government are restoring optimism. Despite Germany's still-weak fundamentals, sentiment across the eurozone also improved markedly. The eurozone's economic sentiment climbed by 23.7 points to 35.3, while assessments of current conditions rose 11.7 points to minus 30.7.

While both regions remain in negative territory in terms of present conditions, the momentum shift reflects renewed confidence in the policy mix now in play. If sustained, these signals could mark the beginning of broader recovery across Europe. This latest updates takes the RPI to minus 1 and the RPI-P to 5, meaning that economic activities are within the expectations of the German economy.

Economic sentiment is seen surging again to 31.3 in June from an already surprisingly strong 25.2 in May.

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.