Dow Jones Newswires: German economic expectations see worst drop on record after war in Ukraine

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Economic expectations in Germany fell more sharply than ever before in March, as a recession becomes more likely due to Russia’s invasion of Ukraine, the ZEW economic research institute said Tuesday.

The index of economic expectations declined to minus 39.3 in March from 54.3 in February, way below the 3.0 forecast by economists in a poll by The Wall Street Journal. This is the biggest drop in expectations since the survey began in December 1991, ZEW said.

“The war in Ukraine and the sanctions against Russia are significantly dampening the economic outlook for Germany,” said Achim Wambach, president of the ZEW institute.

The collapsing economic expectations are accompanied by an extreme rise in inflation expectations, Mr. Wambach said. The experts, therefore, expect stagflation in the coming months, he added.

The views about the current economic situation in Germany also worsened, with the index falling to minus 21.4 from minus 8.1 in February, the ZEW institute said. Economists expected the index to come in at minus 20.0.

Write to Maria Martinez at maria.martinez@wsj.com

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