German investor sentiment improved notably in December, with ZEW Economic Sentiment index rising from 38.5 to 45.8, well above expectations of 40.0. The gain signals growing optimism about the medium-term outlook, even as Current Situation Index fell from -78.7 to -81.0, undershooting forecasts of -76.2.
Across the Eurozone, sentiment strengthened even more decisively. ZEW Economic Sentiment index jumped from 25.0 to 33.7, comfortably beating expectations of 26.3, suggesting confidence is building that the region may be nearing a turning point after a prolonged period of stagnation. However, Current Situation Index edged lower by -1.2 pts to 28.5.
ZEW President Achim Wambach said expectations have become more positive after three years of economic stagnation, with expansive fiscal policy expected to inject fresh momentum into the German economy. Still, he cautioned that the “recovery remains fragile”, with persistent trade conflicts, geopolitical tensions, and weak investment likely to feature prominently on the reform agenda heading into 2026.
