| Consensus | Consensus Range | Actual | Previous | |
| Current Conditions | -78.0 | -78.0 to -76.0 | -77.8 | -73.7 |
| Economic Sentiment | -20.5 | -26.0 to -15.0 | -10.2 | -17.2 |
Highlights
The May 2026 survey reflects a fragile but gradually improving economic outlook for Germany and the eurozone. Although the ZEW remains negative at minus 10.2 points, the 7-point increase suggests that financial market experts are becoming cautiously more optimistic after two months of sharp deterioration. This modest recovery appears largely driven by expectations that the Iran war may ease, thereby reducing pressure on energy markets and restoring business confidence.
Despite this improvement in sentiment, underlying economic conditions remain weak. Germany's current situation indicator declined further to minus 77.8 points, reflecting persistent structural and cyclical pressures, including weak industrial production, elevated energy prices, and inflation above the European Central Bank's target. Sectoral performance also reveals uneven recovery dynamics. The automotive and mechanical engineering industries continue to deteriorate significantly, while weakening private demand signals subdued consumer confidence and restrained domestic spending.
Conversely, the information technology sector demonstrates strong resilience, with expectations rising sharply, alongside moderate improvements in construction and metal production. Across the eurozone, sentiment has also strengthened, indicating cautious regional optimism. Overall, the findings suggest that recovery prospects for the second half of 2026 remain highly dependent on geopolitical stability and the effectiveness of government stimulus interventions. Consequently, the updates take the RPI to 9 and the RPI-P to 11, meaning that economic activities are now within market expectations for Germany.
Market Consensus Before Announcement
With fallout from the Mideast war, sentiment is seen down in May at minus 78.0 for current conditions and minus 20.5 for economic sentiment from minus 73.7 and minus 17.2 in April, respectively.
Definition
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.
Description
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.