Germany remains “entrenched in recession” as business sentiment deteriorates further, continuing its decline for a second consecutive month, according to a recent survey.
The Ifo Institute revealed that its business climate index dropped to 85.2, falling short of the anticipated 86.7 and marking a decrease from the slightly adjusted previous value of 86.3 in December.
Clemens Fuest, President of Ifo, commented, “Businesses are viewing their current situation more negatively and their outlook for the coming months has grown increasingly bleak. The German economy is firmly in the grips of a recession.”
Andrew Kenningham, the chief Europe economist at Capital Economics, interpreted the data as a sign of further contraction in Germany’s economy for the first quarter of this year, following a 0.3pc decline in 2023.
He explained, “The delayed effects of stricter monetary policies, coupled with the drag from fiscal policy tightening, are likely to suppress consumer and investment spending, while external demand remains notably weak.”
