After five straight months of increases, the ZEW investor economic sentiment indicator is expected to drop back. This follows an already weaker than expected outcome of 54.8 in March, as the positive news flow has been petering out somewhat and more realistic expectations of growth set in after a stellar Q1.
Societe Generale sees the ZEW investor economic sentiment indicator falling back to 49.6 in April.
The level still remains high however, at 0.8 standard deviations above long-run average, and suggests a strong momentum going into Q2. An interesting period is likely to follow, one in which surveys and expectations may show some greater volatility and a less clear trend.
In case if they are right on the outlook for German growth, surveys may fluctuate around the current levels this year.
However, expectations of sustaining as high growth as in Q1 are likely to overly optimistic as headwinds to trade and uncertainty as regards the sustainability and strength of the recovery is likely to linger for some time longer.
