In August 2024, the economic expectations among German financial experts saw a significant decline, dropping 22.6 points to 19.2, marking the largest drop in two years according to the ZEW Index.

This decline in expectations is attributed to high uncertainty stemming from unclear monetary policies, disappointing business figures from the U.S. economy, and escalating concerns over the conflict in the Middle East.

The assessment of the current economic situation also worsened, falling by 8.4 points to -77.3, reflecting deteriorating conditions.

Currently, the German economy is on the brink of recession, with a GDP contraction of 0.1% in the second quarter of 2024, following a slight growth of 0.2% in the first quarter.

Additionally, the ifo Institute reported a drop in the business climate index for the third consecutive month, indicating a significant decline in business sentiment.

Export-oriented sectors in Germany are particularly affected by the declining economic outlook, diminishing hopes for recovery.

Investor confidence in Germany has seen its largest decline since July 2022, driven by uncertainties regarding monetary policy and the economic situation in the U.S.

ZEW President Achim Wambach noted that the economic outlook for Germany is deteriorating, particularly impacting export-heavy sectors.

Concerns regarding the U.S. economy have intensified, contributing to the overall negative sentiment in Germany.

The ZEW index, derived from monthly surveys of 152 analysts and institutional investors, serves as a crucial economic forecast tool for Germany.

The economic sentiment index's drop to 19.2 points from 41.8 in July highlights the severity of the current economic challenges.

This decline in expectations is reflective of growing concerns about the global economy, affecting forecasts for major economies including the Eurozone, USA, and China.