Inflation, expected increases in energy costs hit morale
But expectations for financial sector improve
German economy stagnated in Q2
Finance minister has said economy is fragile

BERLIN, Aug 16 Reuters German investor sentiment fell slightly in August on concerns the rising cost of living will hit private consumption, and suggesting Europe39;s largest economy is tipping into recession.

The ZEW economic research institute said on Tuesday its economic sentiment index fell to 55.3 points from 53.8 in July. A Reuters poll had pointed to an August reading of 53.8.

The still high inflation rates and the expected additional costs for heating and energy lead to a decrease in profit expectations for the private consumption sector, ZEW researcher Michael Schroeder said in a statement.

In contrast, the expectations for the financial sector are improving due to the supposed further increase in shortterm interest rates, he added.

The German economy stagnated in the second quarter, with the war in Ukraine, soaring energy prices, the pandemic and supply disruptions bringing it to the edge of a downturn. Inflation is running at 8.5.

Finance Minister Christian Lindner said last week the economic situation was deteriorating in Germany and the outlook fragile.

Thomas Gitzel, an economist at VP Bank, expects the economy to shrink in the third quarter.

The recession has therefore already begun, as no improvement is expected for the final quarter of 2022 either, he added. Even…