The confidence of German investors continues to fall in view of the energy shortage


Investor confidence in the German economy continued to fall from already low levels as the burden of higher energy costs weighs on businesses and households.

The ZEW Institute’s expectations indicator slipped from -53.8 in the previous month to -55.3 in August, missing economists’ estimates for a slight increase.

An index of current conditions also deteriorated.

“The persistently high inflation rates and the expected additional costs for heating and energy lead to falling profit expectations for private consumption,” said Michael Schroeder from the ZEW in a statement on Tuesday.

Europe’s largest economy – which did not grow in the second quarter – is suffering from lower Russian energy supplies, raising the risk of rationing in the coming months.

Households are facing an additional annual cost of around €290 after the government decided to spread the burden of rising wholesale prices beyond utilities, further fueling inflation.

On a positive note, gas flow through the Nord Stream pipeline resumed last month after scheduled maintenance and storage facilities reached a filling milestone ahead of schedule, raising hopes that bottlenecks can be avoided.

Last week, Chancellor Olaf Scholz promised citizens a third aid package to deal with the cost of living crisis and warned that “serious times” were ahead for the country.

His government is rushing to reduce the country’s reliance on Russian fossil fuels while enacting energy-saving measures including cooler office temperatures during the heating season.

Meanwhile, low water levels on the Rhine, a key transport link, are jeopardizing the movement of fuel and other goods, potentially exacerbating the type of supply problems businesses are struggling with as a result of the Covid-19 pandemic. The confidence of German investors continues to fall in view of the energy shortage

Fry Electronics Team

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