German Chancellor Angela Merkel arrives to make a press statement on the spread of the new coronavirus COVID-19 at the Chancellery, in Berlin on March 22, 2020.
Michael Kappeler | AFP | Getty Images
Business morale in Germany logged its steepest fall in March since the country’s reunification in 1990, the closely-watched Ifo Institute for Economic Research said Wednesday.
The German Ifo business climate index fell to 86.1 in March from 96.0 in February. The reading was lower than expectations of 87.7 and was last at this level in July of 2009.
“The German economy is in shock,” the Ifo institute said on Twitter.
The latest figures come as the German and world economies face huge uncertainty due to the coronavirus pandemic. The virus, which emerged in China in late 2019, has brought all major economies close to a halt.
Many countries are in national lockdown, meaning that only pharmacies and grocery stores are open; airlines have mostly stopped taking off; and the number of new confirmed cases increases by the day.
The expectations among German companies have “darkened as never before,” the institute also said in a statement Wednesday.
In a preliminary reading, published last week, the institute had warned that the German economy was “speeding into recession.”
“It should not come as a surprise to anyone but economic data for March and beyond will be horrible and probably even beyond the traditional meaning of horrible,” Carsten Brzeski, chief economist at ING Germany said in an email Wednesday.
“All Western economies are facing an unprecedented crisis. Recession is not even the right word for an almost complete standstill of entire economies, almost overnight. Germany is no exception,” he added.
As of Wednesday morning, Germany had nearly 34,000 confirmed cases of the coronavirus, the fifth-highest figure worldwide, with 171 deaths.
Germany, which is highly dependent on exports, has unveiled plans to take on new borrowing — something not seen in the country since 2013 — to mitigate the economic impact of the pandemic. In total, Germany is channeling up to 750 billion euros ($812 billion) into its economy.
Claus Vistesen, chief euro zone economist at Pantheon Macroeconomics, said the German economy is “sliding into the abyss.”
The Ifo’s latest numbers come after data released Tuesday showed the euro zone suffered a major collapse in business activity in March.