(Reuters) – German business morale in August fell to its lowest reading since June 2020 amid high uncertainty due to the Ukraine war and fears of economic downturn in the third quarter, a survey said on Thursday.
The Ifo institute’s closely watched business climate index fell for a third consecutive month but less than expected to 88.5, from an upwardly revised reading of 88.7 in July.
A Reuters poll of analysts had pointed to an August reading of 86.8.
“Uncertainty among the companies remains high, and the German economy as a whole is expected to shrink in the third quarter,” said Ifo President Clemens Fuest.
Commerzbank (ETR:CBKG) chief economist Joerg Kraemer said consumers and companies were suffering from the gas crisis, especially as consumers seemed to have already spent what money they had saved during the coronavirus pandemic.
“We expect the second half of the year and the first quarter of next year to be more recessionary than ever,” he said.
The German economy grew 0.1% in the second quarter despite the war in Ukraine and worries about the energy supply thanks to household and government consumption.
European countries have been racing to fill their gas storage facilities as Russian energy giant Gazprom (MCX:GAZP) has reduced supply via the Nord Stream 1 pipeline, increasing concerns about a potential gas shortage come wintertime.
