‘Fear has taken the wheel’: German investor sentiment plummets in July


A general view shows the city of Jena with the former East German production facilities of the company VEB Carl Zeiss Jena in Jena, Germany March 21, 2019. REUTERS/Fabrizio Bensch

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  • ZEW plunges lower than at the start of the pandemic
  • Concerns over energy supply weigh heavily on sentiment
  • Recession fears rise, analysts say

BERLIN, July 12 (Reuters) – German investor confidence dipped below levels at the start of the coronavirus pandemic in July due to major energy problems, supply bottlenecks and interest rate hikes. European Central Bank.

The ZEW economic research institute said on Tuesday its economic sentiment index fell to -53.8 points from -28.0 in June. The July figure is slightly lower than the values ​​seen in March 2020, when Germany experienced its first pandemic-related lockdowns.

A Reuters poll had indicated a July reading of -38.3.

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The index, for which the ZEW surveyed 179 analysts and institutional investors from July 4-11, showed that expectations for energy-intensive and export-oriented sectors have particularly fallen, according to ZEW chairman Achim. Wambach.

“Experts assess the current economic situation significantly more negatively than the previous month and have further lowered their already unfavorable forecasts for the next six months,” he added.

An index of current conditions fell to -45.8 from -27.6. The consensus forecast was for a reading of -34.5.

Concerns about a recession are growing, analysts said.

“Fear has taken over the wheel,” said Alexander Krueger, chief economist at private bank Hauck Aufhaeuser Lampe.

“The threat of a shutdown in gas deliveries and the sharp fall in real wages in particular lead to the blues,” he said, adding that worries about a recession will continue to grow as long as a possible freeze in the gas supply will continue to loom.

The Nord Stream 1 which carries Russian gas to Germany began its annual maintenance on Monday, with flows set to be interrupted until July 21, but governments, markets and businesses fear the shutdown could be extended due to the war in Ukraine. Read more

German Economy Minister Robert Habeck warned earlier this month that the current energy shortage could lead to a recession in Germany and a credit crunch that would threaten the country’s economic strength.

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Reporting by Klaus Lauer, Reinhard Becker and Christian Kraemer Writing by Miranda Murray Editing by Rachel More, Kirsti Knolle and Philippa Fletcher

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