Confidence in German economy drops to lowest level since first lockdown

0


Global shortages of key materials have brought confidence in Germany’s heavy economy down to its lowest level since the pandemic’s first lockdown.

The Zew Institute’s closely watched sentiment gauge extended a four-month plunge as forecasters warned the recovery in Europe’s largest economy had already passed its peak.

The indicator fell from 40.4 points to 26.5. Over the summer, Zew’s measure of investor confidence fell from a 21-year high to a 17-month low. It measures the difference between analysts who expect the economy to improve, stay the same, or deteriorate over the next six months.

Zew Chairman Professor Achim Wambach said that “the global shortage of chips in the automotive sector and the shortage of building materials in the construction sector have resulted in a significant reduction in profit expectations for these sectors.”

“This may have had a negative effect on economic expectations,” he said, adding that sentiment “had dropped considerably” in September. Covid cases are also starting to pick up as the fast-spreading Delta variant increases infections.

The collapse in sentiment comes on top of growing evidence that Germany’s recovery is running out of steam ahead of the elections that will mark the end of Angela Merkel’s 16 years as chancellor. Merkel’s CDU lost its lead ahead of the September 26 vote, with the center-left SPD leading the polls for the first time in 15 years.


Share.

About Author

Leave A Reply