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Ifo business climate deteriorates significantly


The business prospects in many German companies are worse than they have been since the outbreak of the pandemic. Economists are also predicting a difficult winter for the economy.

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Turbine production in Rostock (archive)

Photo: Bernd Wüstneck/ picture alliance/dpa

Autumn, which was characterized by energy price shocks and high inflation, is casting its shadow: the mood in the German economy is currently as bad as it was last in May 2020 - i.e. after the first effects of the corona lockdown.

The business climate fell in September compared to the previous month by 4.3 points to 84.3 points, as reported by the Munich Institute for Economic Research (ifo).

Analysts had expected a downturn, but the forecasts were again undershot.

The mood had deteriorated sharply in the previous months.

Economists surveyed by the Reuters news agency had previously only expected a decline to 87.0 points.

"The German economy is sliding into a recession," says Ifo President Clemens Fuest.

"The pessimism with regard to the coming months has increased significantly." The mood has deteriorated in almost all sectors.

The approximately 9,000 respondents in German management floors were even more skeptical than before about the business situation and prospects.

recession in the winter half-year

The Ifo index signals more than ever a recession in the winter half-year, said Commerzbank chief economist Jörg Krämer.

The energy price shock is causing consumers' purchasing power to collapse and making the production of many companies unprofitable.

"Germany has become poorer due to the massive increase in the price of energy imports," said Krämer.

“We are facing an economically difficult winter.” The Ifo barometer collapsed in the service sector, and the hospitality industry in particular fears difficult times.

The business climate also deteriorated noticeably in trade and construction.

In the spring, the German economy still managed a mini growth of 0.1 percent despite the consequences of Russia's attack on Ukraine.

At the moment, however, the prospects are bleak due to the worsening energy crisis and high inflation.

The Bundesbank expects the economy to shrink slightly at the end of the summer quarter and even lose momentum noticeably at the end of the year and at the beginning of 2023.


Source: spiegel

All business articles on 2022-09-26

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