German business confidence drops sharply due to war concerns

On March 24, 2022, a boat cruises the River Main while watching the sunset over Frankfurt, Germany. (Michael Probst / AP Photo)

Berlin-Germany’s confidence in business has plummeted as business owners’ outlook for the coming months diminishes after Russia’s invasion of Ukraine, a Friday study showed.

According to the Ifo Institute for Economic Research, the monthly confidence index, the hottest indicator in Europe’s largest economy, fell from 95.8 points in February to 90.8 points in March. Emotions were said to have “collapsed.”

The company’s management’s assessment of the current situation was slightly worse than in February, but the outlook for the next six months was much worse.

The index’s forecasts have fallen by record levels, even more sharply than when the coronavirus pandemic struck Germany in March 2020, Ifo said.

“German companies expect tough times,” Ifo said in a statement.

Before the war in Ukraine broke out, business confidence had risen for the second straight month.