Germany's business confidence plummets
Berlin, Jul 25: Morale among German businesses has fallen as rising prices for goods and fuel dampen growth prospects, according to a survey by the German ifo institute think tank published on Monday.
"High energy prices and the threat of gas scarcity are a burden on growth," ifo President Clemens Fuest said. "Germany is standing on the brink of a recession."
What did the survey reveal?
The ifo business climate index fell almost four points from 92.2 in June to 88.6 in July. The index measures businesses' confidence in the current climate in comparison to a reference point set in 2015.
It is based on a survey of around 9,000 managers from across the German business community.
The fall in confidence represents a new downward trend following over a year of recovery since the lows seen in early 2020 when the coronavirus pandemic broke out.
July's confidence index number represents the lowest point since June 2020.
The think tank pointed to the skyrocketing cost of energy in Germany, and across Europe, exacerbated by Russian threats of reducing or cutting gas supplies.
"The massive slump in the ifo business climate survey reflects the fear among German businesses of a gas crisis," Jörg Krämer, chief economist at Commerzbank told Reuter." He added that the survey results point to a coming downturn in the German economy, but the question of how bad that will be is "above all in Putin's hands."