BNP Paribas’ broker Cortal Consors in Madrid sent out on Tuesday the results of a curious exercise in which they matched the German indicator of economic sentiment ZEW and the country’s gross domestic product. The conclusions will not please Chancellor Angela Merkel.
The analysts tried to find a correlation by adding the expectations index and the real situation. Until August 2008, the degree of correlation was 83 percent, but when the last quarters are included, the percentage drops to 73. As the chart shows, ZEW figures did not reflect the level of economic contraction that was actually recorded.
During 2010, the ZEW index also missed the strength of the recovery.
The experts said that business and investor sentiment tends to follow suit once the evolution of the GDP has been asserted. But “taking into account that some time is needed before the difference is compensated, the German economy would expand in October 1.2 percent–1 percent in the second quarter up from the same period in 2011. Thus, following the ZEW numbers, the German economy would end the second half of 2012 with a fall of -0.3 percent.”