Week 7, 2012: International Economic Sentiments Survey

Summary: Every month the Centre for European Economic Research (ZEW) in Germany surveys financial experts asking for their opinions on how various economies will perform over the next 6 months. The latest one shows the USA and Germany doing well, but the Eurozone and the UK lagging behind.

What does the chart show? Each month, up to 350 financial experts are surveyed about their feelings for the next six months across a range of economic indicators and a number of countries. The number shown in the graph is the balance of those who are described as optimistic overall minus those who are pessimistic overall, so a positive number shows a generally positive outlook, and a negative number a negative outlook. We've included four economies in the graph this week: Germany (in blue), the Eurozone (in red), the USA (in green), and the UK (in yellow).

Why is the chart interesting? Although economic sentiment surveys are not a very accurate indicator of how an economy will actually perform over the next six months, they are very interesting as a snapshot of overall confidence in an economy. Over the past 6 to 9 months, confidence in the future of Germany and the Eurozone has been very low, and although both seem to be bouncing back now, Germany is seen as doing better, and is now in a positive position for the first time since May last year. By contrast, the UK is now seen as doing worse than the Eurozone for the first time since July, when there was a resurgence in confidence in the future of the euro. Generally, though, confidence in the UK has been less dramatic (in either direction) over the whole period shown.

The great hope for the global economy seems to be the USA, who are currently enjoying very strong confidence levels equal to the beginning of last year.