MUNICH (dpa-AFX) – The German economy is not getting going: the mood surprisingly deteriorates before the wine festival. The Ifo business climate, Germany’s most important economic indicator, fell by 0.8 points to 86.4 points in December, as the Ifo Institute announced on Monday in Munich. Analysts, however, had expected an increase, with an average of 87.7 points expected.
In addition, the development in the previous months was weaker than previously known. According to revised figures, the business climate has increased not three times in a row since late summer, but only twice. Three increases in a row are usually considered an economic turning point.
The approximately 9,000 companies surveyed rated both the current economic situation and their expectations for future business less favorably. “The economy remains weak even during the Christmas season,” commented Ifo President Clemens Fuest. The business climate deteriorated in industry, trade and construction. Only among service providers did the mood brighten slightly.
Bank economists reacted with disappointment to the development: “There was actually a lot to suggest an end to the economic downturn in the last few weeks,” explained Jens-Oliver Niklasch from the Landesbank Baden-Württemberg. Recently, the prospect of falling key interest rates had given rise to hope. But the latest figures from the industry were once again disappointing. “The last straw was the budget ruling of the Karlsruhe judges.” The Federal Constitutional Court had overturned the reallocation of Corona aid and thus triggered a budget crisis.
Economists also rate the outlook for the coming year as gloomy: “A difficult year lies ahead of us,” commented chief economist Thomas Gitzel from VP Bank. The German economy will not initiate the economic trend reversal in the coming year. “The burden remains high.” These included the still high energy costs. In addition, important German sales markets such as China also developed weakly.
The Ifo business climate is still in recession territory, explained Commerzbank chief economist Jörg Krämer. The German economy shrank slightly in the summer quarter from July to September. The high key interest rates are also considered a burden. If the weak development continues in the final quarter, we could be talking about a technical recession with two negative quarters in a row./bgf/jsl/jha/