Economic sentiment index in Germany increased significantly in June

The economic sentiment indicator in Germany, calculated by the ZEW research institute, rose to 47.5 points in June from 25.2 points in May.

In addition, the assessment of the current economic situation improved, with the indicator for Germany rising by 10 points to minus 72 points. This is the strongest growth in this indicator since April 2023. However, the value remains the lowest among the countries analyzed and the eurozone.

As ZEW President Professor Achim Wambach noted, confidence is growing.

« In June 2025, the ZEW indicator sees another tangible improvement. Recent growth in investment and consumer demand have been contributing factors. This development also seems to strengthen the assessment that the fiscal policy measures announced by the new German government can provide a boost to the economy. Combined with the recent interest rate cuts by the ECB, this could bring economic stagnation in Germany, which has lasted for almost three years, to an end,» he said.

The optimism about the ZEW index, Reuters notes, reflects the latest forecasts by four German economic institutes published last week — they now expect the German economy to grow by 0.3-0.4% in 2025 after two consecutive years of decline.

However, VP Bank analyst Thomas Gitzell said that some skepticism about the positive results is needed given Europe’s trade dispute with the United States and tensions in the Middle East.

On June 4, the German government approved a package of tax breaks totaling €46 billion — the first in a series of expected measures — to support business and the economy for the period from 2025 to 2029. The goal is to strengthen the country’s competitiveness and stimulate investment. The package includes preferential depreciation rules, a gradual reduction in the corporate tax rate, and an increase in existing research subsidies for companies.

As GMK Center reported earlier, the German Bundesbank expects the economy to stagnate in 2025 after two years of recession in the country. This is stated in the central bank’s new semi-annual forecast, released in early June. As noted, the recovery is being delayed by uncertainty over international trade policy, and fiscal measures are only gradually beginning to support the economy.