‘Germany on the brink of recession’, warns IFO, the country’s main economic research center – Observer

The “Germany on the brink of recession“Monday IFO warned, principal think tank The country, which periodically publishes a survey of entrepreneurs. This time, these entrepreneurs indicated that they “expect a significant deterioration in conditions in the coming months”, which portends “uncomfortable timesFor the largest European economy

Activity in the industrial sector declined sharply, raising the levels of pessimism in this sector to the lowest levels that marked the beginning of the epidemic. In the service sector “business climate” [também] Significantly deteriorated.

Germany is facing uncomfortable times,” sums up the think tank.

Companies realize, according to the IFO, that it is very difficult to predict the near future, which in itself is a factor that penalizes investment. “Rising energy prices and shortages of natural gas are already taking a toll on the economy,” says Klaus Wallrabe, chief economist at IFO.

Economic activity contracted in July, adding to recession fears in the eurozone

On Friday, advanced data from Europe’s largest economies indicated that activity in the euro zone contracted in July, the first time since the pandemic restrictions. The scenario was defined by the so-called S&P Purchasing Managers’ Indexes (PMIs) – the index was not only worse than economists had expected, but also fell below the 50-point threshold, indicating a contraction in activity and fueling recession fears.

A recession is usually defined as two consecutive quarters of decline in economic output in a series, i.e. in the comparison between the quarter and the immediately preceding quarter.