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German investor confidence falls, fuelling recession fears

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German investor confidence fell in September for a third straight month, a closely watched survey showed on Tuesday, fuelling fears of a looming recession in Europe’s biggest economy.

The ZEW institute’s economic expectations index dropped 6.6 points from the previous month to minus 61.9 points, as soaring inflation and a shutdown of Russian gas supplies ring alarm bells.

For its survey, ZEW quizzes experts about the current economic situation and the outlook for the coming six months. A negative reading means that most experts are pessimistic.

“The outlook for the next six months has deteriorated further,” said the group’s president Achim Wambach.

“The prospect of energy shortages in winter has made expectations even more negative for large parts of the German industry.”

Investors’ assessment of the current economic situation in Germany also fell by 12.9 points in September from the previous month, to minus 60.5 points, according to the survey.

LBBW bank analyst Jens-Oliver Niklasch said a recession in Germany was “almost a foregone conclusion.

“The question is now how much the economy will shrink — and how high inflation will rise.”

The bleak picture from ZEW came a day after think-tank the Ifo institute forecast that the German economy would shrink by 0.3 percent in 2023.

Germany, along with the rest of Europe, is facing an energy crisis after Russia’s Gazprom shut down the key Nord Stream 1 gas pipeline in the wake of the Ukraine war.

German inflation hit 7.9 percent in August, and the government is rushing to find ways to ease the burden on consumers and businesses.

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Agence France-Presse (AFP) is a French international news agency headquartered in Paris, France. Founded in 1835 as Havas, it is the world's oldest news agency.

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