German economic sentiment surges in March on fiscal policy optimism

By Tuba Ongun

ANKARA (AA) – Economic sentiment in Germany showed significant improvement in March, reaching its highest levels since February 2022, according to data released on Tuesday by the Leibniz Centre for European Economic Research (ZEW).

The ZEW Indicator of Economic Sentiment for Germany soared 25.6 points from a month ago to 51.6 in March, marking its strongest monthly rise since January 2023.

The jump, which exceeded expectations, signaled growing optimism among financial market experts about the country’s economic future.

"The brighter mood is likely due to positive signals regarding the future German fiscal policy, for example the agreement on the multibillion-euro financial package for the federal budget," ZEW President Achim Wambach said.

"In particular, prospects for metal and steel manufacturers as well as the mechanical engineering sector have improved," he noted.

The European Central Bank's (ECB) sixth consecutive interest rate cut also bolstered sentiment, offering favorable financing conditions for both private households and businesses, Wambach added.

The assessment of Germany's current economic situation showed a marginal improvement, rising 0.9 points to minus 87.6.

Economic sentiment in the eurozone mirrored Germany’s upward trend, with the ZEW indicator for the bloc surging 15.6 points to 39.8. The evaluation of the current economic situation in the eurozone remained relatively stable, ticking up 0.1 points to minus 45.2.