The ZEW Indicator of Economic Sentiment is a simple sentiment indicator created out of the monthly ZEW Financial Market Survey. The ZEW Financial Market Survey is an aggregation of the sentiments of approximately 350 economists and analysts on the economic future of Germany in the medium term. ZEW stands for Zentrum für Europäische Wirtschaftsforschung, which translates to the Center for European Economic Research.
The indicator incorporates current economic conditions in constructing a 6-month outlook. Since investors and analysts are highly informed regarding economic conditions, changes in their sentiment can be a reliable forecast of future economic activity.
If the current reading is an improvement from the past figure or is better than forecasted, it could have a positive impact on the nation