German investor confidence marginally declined in August due to worries that the continent’s largest economy, which is on the verge of recession, will be negatively impacted by growing private consumption due to rising living costs.
The ZEW economic research organization said on Tuesday that its measure of economic sentiment dropped from -53.8 in July to -55.3 points. An August result of -53.8 was predicted by a Reuters survey.
“The still high inflation rates and the expected additional costs for heating and energy lead to a decrease in profit expectations for the private consumption sector,” ZEW researcher Michael Schroeder said in a statement.
“In contrast, the expectations for the financial sector are improving due to the supposed further increase in short-term interest rates,” he added.
The German economy stagnated in the second quarter, with the war in Ukraine, soaring energy prices, the pandemic and supply disruptions bringing it to the edge of a downturn. Inflation is running at 8.5%.
Finance Minister Christian Lindner said last week the economic situation is deteriorating in Germany and the outlook fragile.
Some leading German companies are nonethless upbeat.
Truckmaker Daimler Truck said last week it would keep prices high even if certain costs begin to fall in order to compensate for lower margins since last year, forecasting demand will remain strong into 2023 despite fears of recession.
“We expect a strong 2023 – demand will outpace the supply side,” chief executive Martin Daum said.
A ZEW index on German current conditions fell to -47.6 from -45.8 in the prior month.