Germans gloomy as recession looms

German corporate and consumer confidence sank to new lows last week, hastening fears that Europe’s biggest economy is sliding into a deep recession. The gloomy outlook pushed the euro down to a six-month low against the dollar.

Falling fuel prices, the drop in the euro exchange rate against the dollar and even the prospect of lower interest rates failed to inject confidence about the future.

The IFO institute, based in Munich, reported that its business climate index had fallen worse than expected in August to its lowest level since February 2006, while future expectations are at their lowest level since February 1993.

The overall German economy contracted by 0,5% between April and June after growing by 1,3% in the first quarter, a contraction initially ascribed to special factors. But third-quarter output could also shrink, putting the economy in a technical recession. —

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