German business morale plummeted in March to its lowest level since 2009, a preliminary survey showed on Monday, suggesting that Europe's largest economy is falling into recession due to the impact of the coronavirus.
The Ifo institute said preliminary results from its March survey showed its business climate index slumped to 87.7 from 96.0 in February.
"This marks the biggest drop since 1991 and brings the index to its lowest level since August 2009," Ifo President Clemens Fuest said, adding that business expectations in particular had darkened as never before.
"The German economy is speeding into recession," Fuest added.
The preliminary Ifo figures are based on roughly 90% of the usual number of responses. The institute will publish the final survey figures on March 25. The survey was conducted between March 2-18.
Massive Impact On Economy
Separately, the DIW institute said on Thursday that the coronavirus outbreak would massively impact the German economy at least in the next two quarters and that it expected gross domestic product to shrink by 0.1% this year.
The forecast is based on an optimistic V-shaped scenario in which a sharp drop of business activity would be followed by a quick rebound later this year, the institute added.
However, the recession could turn out to be much more severe if the uncertainty among companies and consumers sparked by the new virus should persist, DIW said.
