Germany records ‘steepest decline’ in economic sentiment since July ’22

Germany’s economic sentiment fell sharply in August 2024, German ZEW survey data showed on Tuesday. The ZEW institute indicator of economic sentiment plunged to 19.2 points in August 2024, a sharp 22.6-point drop from the previous month and the “steepest decline since July 2022.”

The assessment of Germany’s current economic situation also fell significantly, dropping 8.4 points to -77.3.

ZEW President Professor Achim Wambach, highlighted that this drop reflects the most severe deterioration in economic expectations in two years, impacted by high uncertainty surrounding monetary policy, weak US economic data, and rising Middle East tensions.

“The economic outlook for Germany is breaking down.” said Professor Wambach. “In the current survey, we observe the strongest decline of the economic expectations over the past two years. Economic expectations for the eurozone, the US and China also deteriorate markedly. As a result, especially the expectations for export-intensive German sectors decline. It is likely that economic expectations are still affected by high uncertainty, which is driven by ambiguous monetary policy, disappointing business data from the US economy and growing concerns over an escalation of the conflict in the Middle East. Most recently, this uncertainty expressed itself in a turmoil on international stock markets,”

The sentiment for the eurozone also worsened, with the indicator falling by 25.8 points to 17.9. Conversely, the eurozone’s situation indicator saw a slight improvement, increasing by 3.7 points to -32.4.

Attribution: ZEW institute

Sub-Editing: Y.Yasser