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Container port in Stuttgart: Deterioration in all areas
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The mood in the German economy deteriorated significantly in July.
The Ifo business climate fell by 3.6 points to 88.6 points in a monthly comparison, as the institute announced on Monday.
This is the lowest level since June 2020. Although experts had expected a slowdown, on average they only expected a drop to 90.1 points.
"Germany is on the threshold of recession," commented Ifo President Clemens Fuest on the results of the survey.
"High energy prices and the threat of gas shortages are having a negative impact on the economy." In detail, the business climate deteriorated significantly in all economic sectors considered.
The Ifo business climate is considered Germany's most important leading economic indicator.
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Other economists also consider the foreseeable bottlenecks in the gas supply to be the central issue driving the economy.
"Above all, the fear of a prolonged gas supply stop in connection with the maintenance of Nord Stream 1 is likely to have clouded the business prospects of many companies at the time of the survey," explains Fritzi Köhler-Geib from KfW.
There was initially no complete stop to deliveries, but the uncertainty about the energy supply still remains enormous.
"This is having a negative impact on business prospects in energy-intensive industrial sectors, but also in consumer-related areas of the economy."
»It is completely unclear where an economic turnaround is supposed to come from«
According to Jörg Kramer from Commerzbank, the course of the economy is currently largely dependent on the decisions in the Kremlin: "The Ifo business climate, like the purchasing managers' index, is now clearly pointing to a downturn in the German economy.
How bad it gets in the end is unfortunately mainly in Putin's hands."
Alexander Krüger from Hauck Aufhäuser Lampe Privatbank has little hope of a quick turn to the positive: »A gas supply stop and increasing corona case numbers remain the main economic risk.
The weak euro increases concerns about costs and inflation.
It is currently completely unclear where an economic turnaround will come from.«
mike/Reuters
