ZURICH (MaceNews) – Economic sentiment in Germany fell by a historic margin in March, as the war in Ukraine and resulting sanctions against Russia pushed the ZEW institute’s measure of economic sentiment into sharply negative territory.
The ZEW measure of economic sentiment plunged 93.6 points in March to a reading of -39.3 from the February result of 54.3. Economists were expecting the index to fall to 10.0 for the month, according to the median of an Econoday survey of economists’ forecasts.
Current conditions suffered as well, falling to -21.4 from -8.1 in February. The result was closer to expectations, however, with the Econoday median showing expectations for a drop to -22.5.
“A recession is becoming more and more likely. The war in Ukraine and the sanctions against Russia are significantly dampening the economic outlook for Germany. The collapsing economic expectations are accompanied by an extreme rise in inflation expectations. The experts therefore expect a stagflation in the coming months. The worsened outlook affects practically all sectors of the German economy, but especially the energy-intensive sectors and the financial sector,” ZEW President Professor Achim Wambach said.
Sentiment in the Eurozone showed the same dynamic, with expectations falling 87.3 points to -38.7 in March, while current conditions fell to -21.9, down 22.5 points from February.
Inflation expectations moved in the other direction, up a whooping 104.6 points to a reading of 69.5, with 76.5 percent of survey respondents expecting inflation to increase in the next six months.