ZEW: 'The economic outlook for Germany is collapsing'
Uncertainties are not decreasing: What's happening with the US economy, interest rates, and the Middle East? Financial analysts are looking increasingly pessimistic about the coming months. A noticeable economic recovery is still not in sight.
Expectations from stock market professionals for the German economy have plummeted in August as much as they have in two years. "The economic outlook for Germany is deteriorating," commented ZEW President Achim Wambach on the development. Contributing factors include "disappointing business figures" from the US economy, unclear monetary policy, and growing concerns about escalation in the Middle East conflict.
The barometer for expectations in the next six months fell by 22.6 points to 19.2 points, according to the Mannheim Center for European Economic Research (ZEW) in its survey of 152 analysts. Economists had only expected a decline to 32.0 points. The barometer for the current situation also declined, by 8.4 points to -77.3 points. In the previous month, when expectations had fallen for the first time in a year, the assessment of the current situation had improved.
Expectations for the eurozone, the USA, and China are also deteriorating significantly. "This is particularly affecting the expectations of export-intensive sectors in Germany," said Wambach further. This suggests that economic prospects will continue to be influenced by high uncertainty. "This uncertainty has also recently been reflected in the stock market crashes on international stock exchanges," said the ZEW President.
The German economy is currently in a technical recession. Gross domestic product shrank by 0.1 percent in the second quarter, after growing by 0.2 percent in the first three months of the year. "The overall economic framework conditions remain unfavorable, and there is a lack of an initial spark," said economist Bastian Hepperle of Hauck Aufhäuser Lampe Privatbank. "A significant economic recovery in the third quarter remains an unfulfilled wish."
The ZEW asks experts from banks, insurance companies, and the financial departments of large companies monthly for their assessments of important international financial market data that provide insights into future economic development. This includes inflation rates, interest rates, stock indices, exchange rates, and oil prices. The ZEW index is considered an important indicator for future economic development in Germany.
Given the current economic challenges, discussions about strengthening the Economic and Monetary Union within the EU have gained traction. The unstable US economy, uncertain monetary policy, and escalating tensions in the Middle East have all contributed to a deteriorating economic outlook in Germany, as stated by ZEW President Achim Wambach. These factors have led to a significant decrease in expectations for economic recovery, as reflected in the ZEW index.
