The ZEW Financial Market Survey measures the institutional investor sentiment, reflecting the difference between the share of investors that are optimistic and the share of analysts that are pessimistic.
For example, if 20% of respondents expect the German economic situation to deteriorate, 30% expect it to remain unchanged and 50% expect it to improve, then the ZEW Indicator of Economic Sentiment would have a positive value of 20. This is a bullish reading and suggests that financial experts see positive signs for growth in the medium term.
As it is a sentiment indicator, double-digit readings are not uncommon. In 2018, for example, the ZEW Indicator of Economic Sentiment went from a positive reading of 20.4 to -25 over seven months. During this time, German economic growth slowed from 2.2% in 2017 to 1.5% in 2018, but the impact on the ZEW Indicator of Economic Sentiment somewhat overstated the severity of this slowdown—as sentiment indicators are known to do.