Germany: Greater than expected fall in investment expectations

Their confidence in its economy has declined to its lowest level for almost a year, following new signs of deepening the crisis in the main processing sector. The index of expectations compiled by the ZEW institute retreated to 3.6 in September from 19.2 in August, according to today’s announcement (17.9.2024). Economists expected a small fall to 17 and no one predicted such a fall. The current conditions index was also reduced to -84,5. “The hope of a rapid improvement in the economic situation is visibly weakened,” ZEW president Ahim Wabach said. “Although the fall in economic expectations for the eurozone suggests an overall increase in pessimism, the fall in expectations for Germany is significantly greater.” The prospects for Europe’s largest economy have been obscured since the astonishing decline in production in the second quarter amid weak industrial performance. Consumers also remain reluctant to open their wallet – even when income increases faster than prices Volkswagen, its leading car industry, announced that it would end a decades-long work agreement and consider closing domestic factories, citing a decrease in demand. The BMW competitor was forced to reduce the forecasts for its profits due to the recall of 1.5 million cars that probably had faulty brakes. Besides, Intel postponed a planned chip factory by about two years.