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The
ZEW economic research institute said on Tuesday its economic
sentiment index fell to -53.8 points from -28.0 in June. The
July figure is slightly below the values seen in March 2020,
when Germany saw its first pandemic-related closures.
A Reuters poll had pointed to a July reading of -38.3.
The index, for which the ZEW polled 179 analysts and
institutional investors from July 4-11, showed that expectations
for energy-intensive and export-oriented sectors fell
particularly sharply, according to ZEW President Achim Wambach.
"Experts assess the current economic situation significantly
more negatively than in the previous month and have further
lowered their already unfavourable forecast for the next six
months," he added.
An index for current conditions fell to -45.8 from -27.6. The
consensus forecast was for a reading of -34.5.
Concerns about a recession are growing, said analysts.
"Fear has taken the wheel," said Alexander Krueger, chief
economist at the private bank Hauck Aufhaeuser Lampe.
"The threat of a stop to gas deliveries and the strong drop in
real wages in particular are leading to the blues," he said,
adding that concerns about a recession will continue to grow as
long as a potential gas supply freeze continues to loom.
The Nord Stream 1 that carries Russian gas to Germany began
annual maintenance on Monday, with flows expected to be halted
until July 21, but governments, markets and companies are
worried the shutdown might be extended due to war in Ukraine.
German Economy Minister Robert Habeck warned earlier this month
that the current energy shortage could lead to a recession in
Germany and a credit crunch that would threaten the country's
economic strength.
(Reporting by Klaus Lauer, Reinhard Becker und Christian
KraemerWriting by Miranda MurrayEditing by Rachel More, Kirsti
Knolle and Philippa Fletcher)
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