The March ZEW surveys for Germany continued to show improvement as the Eurozone's number-one economy shrugged off worries while on the road to recovery, though sentiment in the wider euro area continued its downward spiral.

The current economic situation index for Germany showed a marked increase from 5.2 to 13.6, well above the 6.0 consensus estimate. The indicator of economic sentiment also improved, although only marginally, to 48.5 from the prior 48.2. Experts had been expecting a slight drop to 48.0.

The ZEW Centre for European Economic Research did note that the political situation in Italy and the rescue package for Cyprus having increased the risk that the Eurozone debt crisis will worsen again may have contributed to the lack of a substantial increase in the second indicator.

"The financial market experts stick to their forecast: the economic situation in Germany is likely to improve over the next months," said ZEW President Clemens Fuest.

"As before, the Eurozone debt crisis remains the biggest risk. This fact has been brought back to our attention over the last weeks," he added.

In this context, the ZEW surveys for the Eurozone registered a substantial fall. The economic sentiment indicator plunged nine points to 33.4, well below the consensus forecast for an increase to 43.7. However, the indicator for the current situation remained, according to the ZEW, "almost unchanged" at a level of -76.1 points (down 0.5 points).

JM

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