Germany's economic mood continues to brighten in July 2025, with the ZEW indicator rising to 52.7 points, a strong signal that optimism is growing. Even more striking is the 12.5-point leap in the assessment of the current situation, although it remains profoundly negative at minus 59.5, revealing that sentiment is running ahead of lived economic reality.

This wave of optimism, despite global trade tensions, reflects growing confidence in the effectiveness of policy action. Analysts appear encouraged by hopes for a resolution in the US-EU tariff standoff and the promise of fresh stimulus from Berlin's investment drive. Notably, sectors such as mechanical engineering, metal production, and the electrical industry are benefiting from this renewed faith, hinting at a potential rebound in industrial momentum.

The eurozone mirrors this cautious enthusiasm. While sentiment rose modestly to 36.1 points, the current situation lags at minus 24.2, up 6.5 points. Indeed, July's data captures a delicate turning point, where future expectations are lifting the fog of present challenges, and Germany, long seen as Europe's economic engine, may be preparing to shift gears once again. This latest update raises the German RPI to 17 and the RPI-P to 20, indicating that economic activities in the German economy remain well ahead of expectations.

Germany’s improving trend continues with current conditions expected at minus 66 in July versus minus 72.0 in June. Economic sentiment is seen up again at 50.2 in July versus an already surprisingly strong 47.5 in June.

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.