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Hood manufacturing: Mild recession becoming more likely
Photo: Jan Woitas / dpa
The mood in the boardrooms of German companies has improved for the fourth month in a row.
The Ifo business climate index rose in January to 90.2 points from 88.6 points in the previous month, as reported by the Munich research institute.
"The German economy is starting the new year with more confidence," said Ifo President Clemens Fuest.
However, the companies were less satisfied with the current business than in December, as the survey of around 9,000 executives showed.
However, expectations for the next six months increased.
The government also expects growth
The federal government is now also taking a more optimistic view of economic development.
Federal Minister of Economics Robert Habeck will present the new forecasts in Berlin this afternoon.
According to the Reuters news agency, the government now expects growth of 0.2 percent in 2023, after a minus of 0.4 percent was estimated in October.
Chancellor Olaf Scholz had also recently shown himself to be confident about Germany's economic development.
"All the bad news from A for job loss to Z for the collapse of German industry did not happen," said Scholz at a ceremony for the founding general meeting of the German Chamber of Industry and Commerce (DIHK) on Tuesday.
The severe recession predicted by some did not happen.
On the contrary, the German economy grew last year despite all the adversities.
Energy shortages have been prevented.
Economists see the successful fight against the energy crisis so far as the most important factor for the mild economic development.
The relief for private households in terms of energy costs gives consumers more leeway when it comes to consumption, said Thomas Gitzel, Chief Economist at VP Bank.
The job market is stable, and at the same time the situation in the supply chains is easing.
"The dangers of recession are thus shifting into the future," he said.
However, the consequences of the rate hikes by the central banks would have to be awaited.
Incoming orders have also been weak for a long time.
»Although the backlog of orders is still thick at the moment, it is gradually getting thinner.
That's why a recession is still conceivable - just at a later point in time," said Gitzel.
The Ifo business climate is still at a level where there have been regular recessions in the past, said Commerzbank chief economist Jörg Krämer.
He referred to the high inflation in many countries and the massive rise in key interest rates.
"A mild recession remains the more likely scenario."
mmq/dpa/Reuters
