Economic sentiment in Germany falls to 2008 lows and heralds a recession in the second half of the year

• Moncloa prepares for the worsening of the crisis at the turn of summer

about the

evolution

plummeted in August to

, according to the

of economic sentiment published this Tuesday, which according to experts seems to anticipate a recession scenario in the second semester of the year.

Specifically, this index has fallen 1.5 points this month to stand at

, the lowest negative value in the last fourteen years.

In November 2011, at the dawn of the sovereign debt crisis in the Eurozone, this indicator stood at -55.2 points, a level similar to the current one but still above it, so we have to go back to

, in the midst of financial crisis, to find

"Financial market experts expect a

. Still high

rates and expected additional costs for

lead to lower earnings expectations for the private consumer sector" , explains the team of economists that make up the

for European Economic Research, which publishes this indicator monthly.

However, they detect that the expectations of

are improving due to the expected additional increase in short-term interest rates.

The German economy is fast approaching a perfect storm

Carsten Brzeski, ING

Together with the data from Germany, which are important in setting the course of growth for the entire continent and as it is an

through -among others- foreign trade, this institute has reported a

as a whole, 3.8 points, down to -54.9 points, conditioned, among other things, by the high inflation forecast.

According to

, Global Head of Macro at

, "August's ZEW reading only adds to the bad news coming out of Germany. The long list of risks and challenges facing the German economy makes

."

This expert warns that, on other occasions, the ZEW index has been the best indicator to signal a turning point and regrets that, "with this mindset,

"

. The war in Ukraine probably marked the end of Germany's very successful economic model: importing cheap (Russian) energy and input goods, while exporting high-quality products to the world, benefiting from globalization. The country is now in the midst of a complete overhaul, accelerating the green transition, restructuring supply chains, and preparing for a less globalized world. And these things are on top of long-known problems, such as a lack of digitization, aging infrastructure and aging demographics, to name a few. In the coming weeks and months, these longer-term changes will be overshadowed by

: high inflation, potential energy supply disruptions and ongoing supply chain friction," he warns.

To this is added the impact that the

that is plaguing the country will have in the short term and the approval this Sunday by the Government of a

that, according to the German press, will generate an extra cost of 500 euros on average per year for a family of four.

We now believe that a recession is inevitable in the second half of this year

Andres Kenningham, Capital Economics

“With the new tax and the impact of low water

for the last quarter of the year and

in the second half of the year. "warns the ING analyst.

chief economist for Europe at the British consulting firm

, agrees with this reading

, warning that "

The ZEW survey fell again in August and is at a level consistent with the economic contraction. We now

as the impact of high energy prices on households and industry takes its toll."

This expert recalls that other recent data for Germany have sent a similar and "grim" message, such as the

-of the manufacturing and services sector- or the

, which fell in July and are well below their levels. before Russia invaded Ukraine.

Although

little changed in August, "it also points to a fairly sharp contraction in GDP," he warns.

"German economic activity was flat in the second quarter, even as most of the euro zone expanded quite rapidly on the back of the post-pandemic reopening.

as headwinds from rising energy prices and higher interest rates pick up," he concludes.

The impact on the Spanish economy

The

, so that a recession in the former will cause a slowdown -if not a fall- in the economic growth of our country, as the first vice president herself,

"We do not know if there is going to be a gas cut and

that is why we are already taking measures to try to prevent

and job creation," acknowledged the Minister of Economy in an interview in

Calviño admitted that "

" and that Spain "must prepare for the worst scenario", which confirms that the Government is already anticipating a complicated autumn in economic terms.

Despite this, the Executive expects

this year and 2% in 2023, above the European average, although these estimates could be revised downward if the scenario worsens international and, specifically, if the German economy slows down as the experts expect.

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