Published: March 21, 2023 at 6:24 am ET
By Ed Frankl
The outlook for the German economy deteriorated in March after five months of improvement as turbulent financial markets combined with economic headwinds such as high inflation and rising interest rates weighed more heavily on the economy.
The economic research institute ZEW announced on Tuesday that its index of economic expectations…
By Ed Frankl
The outlook for the German economy deteriorated in March after five months of improvement as turbulent financial markets combined with economic headwinds such as high inflation and rising interest rates weighed more heavily on the economy.
The economic research institute ZEW announced on Tuesday that its index of economic expectations for Germany had fallen from 28.1 in February to 13.0 in March.
Economists polled by the Wall Street Journal expected the index to fall to 17.8.
The international financial markets are under great pressure, which is reflected in the indicator, said ZEW President Achim Wambach.
“The assessment of the banks’ earnings development has deteriorated significantly, but is still slightly positive. The assessments for the insurance industry have also fallen significantly,” he said.
However, the index is still above the low it reached in September, when the prospect of energy shortages in winter dampened the economic outlook for large parts of German industry.
The indicator is also higher than a year ago, when the outbreak of war in Ukraine caused the index to fall to minus 39.3 in March 2022 from a positive reading of 54.3 in the previous month.
The ZEW index, which measures current economic conditions, fell to minus 46.5 in March from minus 45.1 in February, slightly below economists’ expectations of minus 44.0.
The German economy shrank by 0.4% in the fourth quarter of 2022, more than originally thought, and lost momentum as inflation weighed on consumer spending. Economists typically expect another quarter of declines in the first three months of 2023.
Write to Ed Frankl at [email protected]
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