Enlarge image
Stock trader in Frankfurt: Concern about the economy
Photo: Arne Dedert / dpa
Concerns about a recession in Germany are growing among investors, analysts, but also in the companies themselves.
The ZEW index, a barometer for assessing the German economy over the next six months, fell surprisingly sharply in July.
And according to a study by the German Economic Institute (IW), a quarter of companies now expect production to fall.
"Because of serious reasons for the recession, fear has taken over," said Alexander Krüger, chief economist at the private bank Hauck Aufhäuser Lampe, interpreting the results of the surveys.
»As long as a gas delivery stop is acute, recession fears are likely to increase.
It is currently completely unclear where an economic turnaround will come from.«
The Mannheim Center for European Economic Research (ZEW) surveys 179 analysts and investors every month about their economic expectations.
The index rose twice more in May and June.
In July it fell by 25.8 points compared to the previous month to minus 53.8 points.
The experts now assessed the current situation much more pessimistically.
The assessment of the situation and expectations are even slightly below the values of March 2020 at the beginning of the corona crisis.
"The current major concerns about the energy supply in Germany, the interest rate hike announced by the ECB and other corona-related restrictions in China are leading to a significant deterioration in the economic outlook," commented ZEW President Achim Wambach on the development.
Expectations for energy-intensive and export-oriented economic sectors fell particularly sharply.
But private consumption is also estimated to be significantly weaker.
The Ukraine war and the West's sanctions against Russia are causing rising prices for energy, raw materials and food.
This in turn puts a strain on companies and consumers and slows down the economy.
Should Russia turn off the gas tap, Germany and the euro area are threatened with a recession due to production restrictions.
Companies are giving up hope of a post-corona boom
German companies are also looking to the future with much more skepticism because of the consequences of the Ukraine war.
The expectations in terms of production, employment and investments for the current year 2022 are becoming increasingly clouded, according to a study by the IW Institute of around 2300 companies.
According to this, 37 percent expect an increase in production compared to 2021 and a quarter expect a minus.
However, the balance of positive and negative business expectations in June was only twelve percentage points, after 34 in late autumn 2021 and 15 in spring 2022.
A recession is looming, especially in construction.
"Here, material bottlenecks, high cost increases and a lack of employees are slowing down economic activities."
In the spring, the companies had still counted on a catch-up effect when the corona restrictions expired.
However, the IW experts wrote that this potential was “more than wiped out” by the recent high inflation of seven to eight percent.
After all, the prospects for the labor market are positive.
A third of the companies expect a higher number of employees for the current year than in the previous year, while a fifth expect fewer staff.
Despite the headwind from the Ukraine war, there is no threat of a decline in employment in Germany, it said.
There is "no employment shock, but persistent investment weakness".
The conclusion of the experts: "Investment expectations have decreased noticeably." Although the investment climate is still positive despite the high degree of uncertainty as a result of the war, "it has cooled down considerably".
36 percent of the companies are currently expecting higher investments than in 2021, but a quarter of the companies are expecting less spending here.
»This will probably not close the investment gap that arose in the wake of the corona pandemic in 2022.«
Both in the industry, which is suffering from the delivery problems, and among the service providers, disillusionment is growing.
The manufacturing industry faces a year of stagnation.
According to the survey, the service industry also has difficulties finding suitable personnel for vacancies.
mmq/Reuters
