Germany’s economic sentiment strengthened sharply at the start of 2026, offering an early sign that growth momentum may be building. German ZEW Economic Sentiment Index jumped from 45.8 to 59.6 in January, well above expectations of 49.6, while Current Situation Index improved from -81.0 to -72.7, also beating forecasts.
The improvement was echoed at the euro area level. Eurozone ZEW Economic Sentiment rose from 33.7 to 40.8, exceeding expectations of 35.2. The Current Situation measure remained deeply negative, though it showed some stabilization, up from -10.4 to -18.1.
Commenting on the data, Achim Wambach, president of ZEW, said the strong rise suggests 2026 could mark a “turning point”, while cautioning that further reforms are needed to strengthen Germany’s attractiveness as a business location and ensure sustainable growth.
Notably, sentiment improved despite renewed tariff threats from the U.S. Export-oriented industries showed broad-based gains, with sentiment balances rising 18.2 points in steel and metals, 22.7 points in mechanical engineering, and 16.5 points in the automotive sector. Chemicals, pharmaceuticals, and electrical engineering also posted double-digit improvements of 12.4 and 14.0 respectively
Still, ZEW noted, “the unpredictable US trade policy continues to be an additional burden on the German export economy”.
