German Business Sentiment Falls Even Lower In March

- Final March numbers show biggest drop since German reunification

- German economy ‘in shock’

 

Frankfurt, 25 March 2020 (LS NEWS) – German business confidence indicators for this month fell below preliminary readings announced less than a week ago to illustrate the rising fears about the health of Europe’s largest economy.

 

Ifo’s headline business climate index dropped to 86.1 from last Thursday’s estimate of 87.7 and fell well short of February’s 96.0 result. This month’s decline was the biggest since 1991, and the March reading was the lowest since July 2009.

 

The expectations component of the index dropped to 79.9 from the preliminary reading of 82.0 and last month's 93.1. The assessment of the current situation also moved lower.

 

“The German economy is in shock,” Ifo said following the release of the final data.

 

The Munich-based institute said last week’s preliminary report—based on 90pct of survey responses—was the first ever for 70-year-old organisation.

 

Source: Pantheon Macroeconomics

 

The worst is yet to come

 

“Germany’s economy is sliding into the abyss,” said Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics.

 

“In terms of absolute levels, the Ifo index is now at levels last seen in the financial crisis,” ING Chief German Economist Carsten Brzeski said. “The lowest level seen was at 80.7 in December 2008.”  

 

And things are just getting started, Brzeski noted. “It should not come as a surprise to anyone but economic data for March and beyond will be horrible and probably even beyond the traditional meaning of horrible. All Western economies are facing an unprecedented crisis. Recession is not even the right word for an almost complete standstill of entire economies, almost overnight.”

 

The latest slump in German business confidence followed Tuesday’s stark declines in purchasing managers’ indices around the world.

 

According to the Ifo data, “The German economy was pulled into the mire in the first quarter by a slump in March, and Q2 will be even worse, quite possibly cataclysmic,” Vistesen said.

 

--- Eric Culp, European Editor 

@EricCulpLS