Business confidence in Germany plummeted in July as businesses grew more pessimistic due to rising energy costs and the threat of gas shortages.
The Ifo business climate index fell to 88.6 points in July from a revised figure of 92.2 points in June, according to data from the Ifo Institute.
This is the lowest level since June 2020, while estimates called for a decrease to 90.5 points.
“The climate in German business has slowed significantly,” Ifo president Clemens Fuest said.
German businesses expect business to become much more difficult in the coming months and are also less satisfied with their current situation.
An index of sentiment about the current situation fell to 97.7 in July from 99.4 the previous month, while an index of business expectations fell to 80.3 from 85.5 .
“Germany is on the brink of recession,” Fuest stressed.
In manufacturing, the index fell to -7.1 points in July from 0 points in June. Pessimism about the coming months reached the highest level since April 2020 and companies assessed their current situation as worst.
For the first time in two years, new orders fell slightly, Ifo pointed out.
In the services sector, the business sentiment index fell to 0.9 from 10.9 points in the previous month.
In trade, the index fell to -21.6 points in July from -14.7 points in June
Source: Capital
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