German business climate index has fallen to its lowest level since the early stages of the Covid-19 pandemic in May 2020.
The German economy is
heading for recession, the Ifo institute has said,
reporting a stronger-than-forecast plunge in business morale
across all sectors as Germany scrambles to avoid a gas shortage
this winter.
The Ifo institute said on Monday its business climate index fell to
84.3 from 88.6 in August, posting a more severe drop than the
87.0 forecast by economists according to a recent Reuters poll.
It was the lowest level seen since the early stages of the
Covid-19 pandemic in May 2020.
The downturn was visible across all four sectors of the
German economy, Ifo said, adding that pessimism had increased
considerably looking ahead to the coming months.
“We’re seeing a fat minus on all fronts,” Ifo economist
Klaus Wohlrabe said.
“Price expectations have risen again, with
more than one in two companies announcing price increases.”
READ MORE:
EU nations earmark almost half a trillion dollar to deal with energy crisis
Soaring energy prices
In August, German producer prices rose 7.9 percent on the previous
month, with soaring energy prices driving the trend.
The September Ifo survey points “more than ever to a
recession in the winter half of the year” as the extremely high
cost of energy imports makes Europe’s largest economy poorer,
said Commerzbank economist Joerg Kraemer.
“The energy price shock is causing consumer purchasing power
to collapse and making production unprofitable for many
companies,” Kraemer said.
Russia has drastically reduced gas flows to Germany as part
of an economic stand-off over the Ukraine conflict, sending energy
bills soaring for German households and businesses and forcing
the German government to consider rationing this winter.
On Monday, the OECD forecast that the German economy would
contract 0.7 percent next year, slashed from a June estimate for 1.7 percent growth.
READ MORE:
Will the EU’s new measures ease the gas crisis?
Source: Reuters
German business morale down sharply on fears of looming recession
Source: News Achor Trending
0 Comments