Investor confidence in Germany fell to its lowest level since December 2022 in July amid rising expectations that interest rates will continue to rise.

The European Center for Economic Research (ZEW), based in Mannheim, Germany, announced the July results of the ZEW Economic Confidence Index, which measures the expectations of institutional investors and analysts for the next 6 months.

Thus, the index decreased 6.2 points in July compared to the previous month.

The index, which was 8.5 points in June, fell to minus 14.7 points this month.

The market expectation was that the index would drop to minus 10.5 points in April. Thus, the index reached its lowest value since December 2022.

The Current Situation Index in Germany, on the other hand, decreased 3 points to minus 59.5 points in July compared to the previous month.

CONTINUOUS INCREASES IN INTEREST AFFECTED

ZEW Chairman Prof. Dr. In his assessment on the subject, Achim Wambach stated that financial market experts expect the economic situation to worsen by the end of the year, saying: “One of the most important reasons for this is the expectation of that short-term interest rates will be maintained”. to rise in the euro area and the US”.

Wambach stated that experts assess Germany’s important export markets such as China as “weak” and said: “The expected stagnation in economic activities is likely to hit industrial sectors particularly hard. Earning expectations for export-oriented industries could fall significantly once again.” he made the assessment of it.

THE ECONOMY IS IN RECESSION

Technically, the German economy entered a recession, contracting 0.3 percent in the first quarter of this year due to the impact of unusually high inflation and rising interest rates on consumer spending.

The economy contracted 0.5 percent in the last quarter of last year.

The country’s economy is negatively affected by the stagnation of domestic demand due to the increase in interest rates, the decrease in confidence in the economy and high inflation, despite the fact that the bottlenecks that have arisen during the epidemic process of Covid-19 softened.

The German government expects 0.4 percent growth in the economy this year.

On the other hand, the assessments of financial market experts on the economic development of the Eurozone turned negative in July.

Said indicator decreased 2.2 points in July with respect to the previous month and fell back to minus 12.2 points. (AA)