Centre for European Economic Research

What Is the Centre for European Economic Research?

The Centre for European Economic Research, known as ZEW (Zentrum für Europäische Wirtschaftsforschung), is a nonprofit research institute located in Mannheim, Germany. It specializes in delivering expert analysis and policy recommendations focused on the economic dynamics of Europe.

Key Highlights

• Founded in 1990, ZEW operates as a limited liability company (LLC) based in Mannheim, Germany.
• Its team of economists conducts comprehensive applied research, including producing the renowned ZEW Indicator of Economic Sentiment.
• ZEW's insights and economic indicators are highly regarded tools used by businesses, investors, and policymakers across Germany and internationally.

Overview of the Centre for European Economic Research

Established in 1990, ZEW operates under the legal structure of an LLC and is funded through a combination of public support and project-based financing. Approximately 40% of its budget is provided by the German federal government and the state of Baden-Württemberg, with the remainder coming from research grants awarded by entities such as the European Commission, private sector partners, and local authorities.

The institute employs around 190 staff members, two-thirds of whom are scientists. Its interdisciplinary approach brings together economists, business graduates, economic engineers, IT specialists, and experts from fields like law and natural sciences to foster comprehensive economic research.

ZEW’s mission centers on analyzing the optimal functioning of markets and institutions throughout Europe. Beyond research publications, the centre also produces a series of books and magazines that contribute to economic discourse.

Researchers at ZEW cover a broad spectrum of topics including labor market trends, economic development, and the European Union’s political economy. While much of their work emphasizes microeconomic and microeconometric studies, ZEW is globally recognized for its macroeconomic ZEW Indicator of Economic Sentiment, derived from the monthly ZEW Financial Markets Survey that gathers expert perspectives on financial markets and macroeconomic trends.

The ZEW Economic Sentiment Indicator

Since 1991, ZEW has conducted the ZEW Financial Markets Survey, which compiles analysis from hundreds of economists and financial analysts. The resulting ZEW Economic Sentiment Indicator serves as a leading barometer of Germany’s economic outlook.

Investors and market participants rely on sentiment indicators like the ZEW Economic Sentiment Indicator to gauge market mood. A positive reading signals optimism about future economic conditions, while a negative reading reflects pessimism. This sentiment often influences expectations for exchange rates, stock market performance (including the DAX), and other financial variables.

Each month, ZEW surveys approximately 300 economists and analysts from banks, insurance firms, and corporate financial departments. Participants share their six-month forecasts on key economic factors such as inflation, oil prices, interest rates, stock markets, and currency exchange rates.

The survey covers economic expectations for Germany, the United States, the United Kingdom, Japan, France, and Italy. Since 1999, it has also included data from several Central and Eastern European countries including Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovenia, and Croatia.

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