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Ifo index: companies prepare for the harsh corona winter

2020-10-26T10:06:32.510Z


In the fight against the second corona wave, new restrictions are expected - this will have an impact on the economy: The optimism of the companies has evaporated.


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Shopping street in Cologne: Increasingly insecure

Photo: Ralph Peters / imago images / Ralph Peters

The increasing number of new corona infections is putting more pressure on the mood among companies in Germany than expected.

The Ifo business climate index fell in October to 92.7 points from 93.2 points in the previous month and thus for the first time after five increases in a row, as the Munich Institute announced on Monday.

Economists polled by the Reuters news agency had expected 93.0 points.

"In view of the increasing number of infections, the concerns of the German economy are increasing," concluded Ifo President Clemens Fuest.

The managers assessed the outlook for their businesses more skeptically than before, but their location was somewhat more favorable.

"With the increase in the number of infections, the nervousness of the German economy is growing," Ifo economic expert Klaus Wohlrabe told Reuters.

"For the fourth quarter growth of 2.1 percent is emerging. A second hard lockdown is not priced in."

A sticking point would be if schools and daycare centers had to be closed.

"The economy will suffer - a recession is approaching," said DekaBank economist Andreas Scheuerle.

"There is no need for a lockdown in Germany to slow down the economy."

The rapidly increasing number of infections was enough.

The companies lacked people in quarantine, households and companies were becoming increasingly insecure.

In addition, there would be increased restrictions on economic life, including lockdowns in the rest of Europe.

"These are not good prospects for the winter half-year."

In the manufacturing sector, however, the Ifo business climate indicator climbed back into positive territory for the first time since June 2019.

In the service sector - which also includes the hospitality industry, which was badly affected by the Corona crisis - the business climate deteriorated noticeably.

"The optimism of the previous months regarding further business development has disappeared again," explained Fuest.

The mood also clouded over in retail and, according to Ifo, the upward trend stopped in the construction industry.

"The companies corrected their very good assessments of the current situation significantly downwards."

Expectations were also a little more pessimistic.

The German economy collapsed by 9.7 percent at a record pace in spring due to the Corona crisis.

Economists and the federal government expect strong growth for the summer quarter that has just ended.

However, the increase in corona cases in Germany and among important trading partners is causing uncertainty in the economy.

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mik / Reuters

Source: spiegel

All business articles on 2020-10-26

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