Economic sentiment in Germany takes steep dive: ZEW

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BERLIN, July 12 (Xinhua) -- The indicator of economic sentiment for Germany in July slumped by 25.8 points month-on-month to minus 53.8 points, the Leibniz Center for European Economic Research (ZEW) said in its monthly expert survey published on Tuesday.

The assessment of the economic situation also decreased sharply by 18.2 points to minus 45.8 points. "Both the assessment of the economic situation and the expectations are thus even slightly below the values recorded in March 2020 at the beginning of the COVID-19 crisis," ZEW said.

"Expectations for energy-intensive and export-oriented sectors of the economy have fallen particularly sharply, and private consumption is also assessed as significantly weaker," said ZEW president Achim Wambach.

After a brief recovery, consumer sentiment in Germany was "continuing its downward spiral" and fell to a new record low, according to the latest monthly consumer climate study by the market research institute GfK.

Consumers continued to "see a significant risk of the German economy slipping into recession," GfK said. Private consumption, which was an "important pillar of economic growth, is threatening to slump due to the high level of inflation."

Back in May, inflation in Europe's largest economy had peaked at 7.9 percent, the highest level since the first oil crisis in the winter of 1973/1974, according to the Federal Statistical Office (Destatis).

The upward trend in prices in Germany is slowing down as inflation declined to 7.6 percent in June, according to preliminary Destatis figures. As in previous months, energy prices had a "considerable impact on the high inflation rate" as overall energy prices were up 38 percent year-on-year.

For 2022, the Kiel Institute for the World Economy (IfW Kiel) projects inflation to reach a near-record of 7.4 percent, rising at a significantly faster pace than during the oil crisis.

Next year, "when supply bottlenecks ease and crude oil prices cease to have any further impact on the inflation rate," the rate would fall to 4.2 percent, IfW Kiel said in its recent forecast.

According to the ZEW survey, inflation expectations for the eurozone rose by 6.8 points. With a value of minus 25.6 points, the "indicator remains clearly in negative territory." Enditem

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