economic situation
Ifo business climate falls to lowest level since May 2020
German companies are pessimistic about the future. The mood has deteriorated more significantly than experts expected. The Ifo boss speaks of “chronic weakness”.
The mood in the German economy continues to deteriorate. The Ifo business climate fell by 0.9 points to 84.7 points in December, as the Ifo Institute in Munich announced. This is the lowest value since May 2020 – i.e. since the beginning of the corona pandemic. Economists had expected little change at 85.5 points.
The approximately 9,000 companies surveyed by the Ifo Institute are even more pessimistic about the future than before. The expectations indicator fell by 2.6 points to 84.4 points. The assessment of the current situation improved slightly. The corresponding indicator rose by 0.8 points to 85.1 points. “The weakness of the German economy has become chronic,” said Ifo President Clemens Fuest.
“The geopolitical uncertainties related to the war in Ukraine and the US election are weighing on the situation,” commented Michael Herzum, chief economist at Union Investment. “There are great concerns that Germany’s export-driven growth model will be further undermined under the next US administration.” There are also structural problems in important sectors such as the automotive industry. “Growth in Germany will remain weak for the time being.”
Worse mood in industry and the service sector
The index fell noticeably in industry. According to the Ifo Institute, production cuts have also been announced here. “The sluggish global economy is causing severe problems for the export-dependent economy,” commented Thomas Gitzel, chief economist at VP Bank. “Germany is particularly affected by the slump in China.” The climate also deteriorated in the service sector. According to Gitzel, the bleaker labor market prospects may have arrived here.
dpa
Source: Stern
