Germany's economic outlook showed modest improvement in October 2025, with expectations rising 2.0 points to 39.3, suggesting cautious optimism among financial experts. However, this optimism contrasts sharply with the deeply negative assessment of current conditions, which fell further to minus 80.0 points, reflecting the ongoing strain from weak domestic demand and global economic uncertainty.

The latest update signal hopes for a medium-term recovery, even as confidence remains tempered by concerns over the government's investment programme and volatile global markets. Encouragingly, export-oriented industries, notably metal production, pharmaceuticals, mechanical engineering, and electrical equipment manufacturing, show signs of renewed momentum following a recent slump in exports to China. The automotive sector, however, continues to struggle, reflecting broader structural challenges and softening global demand.

Across the eurozone, sentiment dipped modestly, with expectations falling 3.4 points to 22.7 amid fiscal uncertainty in France, and the current situation index weakening to minus 31.8. Overall, the report depicts improving expectations driven by export resilience and innovation, yet weighed down by persistent structural weaknesses and fragile consumer confidence. This latest update takes the RPI to minus 8 and the RPI-P to minus 9, meaning that economic activities are now within the expectations of the German economy.

Current conditions expected to erode further to minus 73.6 in October from an already dismal minus 76.4 in September. Economic sentiment seen better at 41.1 in October versus 37.3 in September.

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.