German economic sentiment worsened in January, with the sentiment index dropping to 10.3 from 15.7 in December, according to a report by the Centre for European Economic Research (ZEW) on Tuesday. The indicator fell significantly lower than forecast by analysts. Meanwhile, the current situation index improved above expectations, rising from a negative 93.1 in December to a negative 90.4 in January. The economic sentiment index for the Eurozone added 1 point from last month, landing at 18, while the current situation indicator grew by 1.2 points to a negative 53.8.
"A lack of private household spending and subdued demand in the construction sector continue to stall the German economy. If these trends continue in the current year, Germany will fall further behind the other countries of the Eurozone. There is also greater political uncertainty, driven by a potentially difficult coalition-building process in Germany and the unpredictability of the economic policy pursued by the new Trump administration," ZEW President Achim Wambach said.
