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The German economy is hurtling towards a recession as the Russia-Ukraine war sours investors’ optimism for Europe’s largest economy, reveals a closely watched survey released today.
Moscow’s barbaric assault of Ukraine and the West’s sweeping set of sanctions to lock Russia out of the global economy is “significantly dampening the economic outlook for Germany,” Achim Wambach, president of ZEW, the company that tracks investor sentiment in the county, said today.
Optimism among Germany’s investors collapsed at the fastest rate on record this month, tumbling to minus 39.3 from 54.3 last month.
The drop smashed economists’ expectations, who had been pencilling in a reading of 10 for March.
Germany is highly dependent on Russia for energy supplies, meaning production could be curbed if oil and gas flows are disrupted by the war or a step in European sanctions.
Oil and gas prices have whipsawed since the start of the war on concerns over the security of future supplies.
Higher energy costs are likely to constrict output in Germany’s manufacturing and industrial production industries, which generate a large share of the country’s output.
The European Union has stopped short of banning imports of Russian energy.
The US has imposed an embargo on Russian oil, while the UK will stop buying Russian oil by the end of this year.
By City AM
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