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Recession Clouds Gather in Germany, Europe’s Largest Economy


Last Updated: September 26, 2022, 18:52 IST

Company order books are shrinking. (Photo: Reuters)

Company order books are shrinking. (Photo: Reuters)

Europe’s largest economy is sending recession signals

Europe’s largest economy is sending recession signals. Germany’s key future indicator, the IFO survey of business confidence, pointed down for the fourth month in a row. The index compiled by the Munich-based Ifo institute dropped to 84.3 in September from 88.5 in August, to its lowest level since the global financial crisis more than a decade ago.

“High energy and commodity prices are weighing on demand and putting pressure on profit margins,” said Carsten Brzeski, chief eurozone economist at ING bank. “Companies can no longer pass through higher costs to consumers as easily as in the first months of the year.”

Company order books are shrinking, while businesses that use a lot of energy, such as bakeries, are facing high costs. The news comes as more economists predict a recession for Europe as a whole. Officials have lined up new supplies of more expensive liquefied gas that can come by ship from countries including the U.S. rather than by pipeline from Russia.

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