Investor confidence in Germany’s recovery declined to the lowest level since late last year after a spike in infection rates, increasing fears over potential tightening of pandemic measures.
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ZEW’s measure of expectations fell to 40.4 in August from 63.3 the previous month, with the Agency’s President Wambach warning of “increasing risks” to the economy.
Covid-19 infections in Germany, Europe’s largest economy, are on the rise despite more than half of the population being fully vaccinated.
The government has already imposed tighter travel rules and is set to debate additional steps during a summit scheduled on Tuesday.
German manufacturing continued to suffer from global supply shortages and unprecedented delivery delays, pushing up price pressures over the past months.
The Bundesbank forecasts growth will improve in this quarter after output expanded 1.5% in the three months through June. Germany’s economy is edging closer to gaining ground lost during the pandemic.