German investor confidence has fallen to its lowest level since 2011 as the country faces the growing prospect of a recession and risks of being cut off from Russian energy supplies grow, according to Bloomberg.
Snapping two months of gains, the ZEW Institute’s expectations index fell to -53.8 in July from -28 the previous month, missing economists’ estimates.
“The current major concerns about energy supply in Germany, the announced rate hike by the ECB and further pandemic-related restrictions in China have led to a significant deterioration in the economic outlook,” ZEW President Achim said on Tuesday. Wambach.
Europe’s biggest economy is among the countries in the region hardest hit by the war in Ukraine, as record inflation cuts demand and disruptions to supply chains leave factories short of parts. There is a 55% chance Germany will slip into recession next year, according to analysts polled by Bloomberg.
Natural gas flows from Russia, on which the country is heavily dependent, have fallen in recent weeks before flows through the Nord Stream 1 pipeline were shut down for two weeks of maintenance. If flows are not restored after the maintenance work ends, Germany could face energy regulations that would hurt its core manufacturing industry.
The situation has already led energy giant Uniper to ask the government for a bailout. The company may need around 9 billion euros – more than double its market value – as it tries to replace its supply of Russian gas with higher-priced alternatives.
The global tight energy supply that has caused shortages and sent electricity and fuel prices skyrocketing may worsen further, he stated on Tuesday the head of the International Energy Agency, telling an event in Sydney that “the world has never seen” a crisis this big.
Source: Capital
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