Ifo Business climate continues to deteriorate

The German economy is in recession. The most important economic gauge is at its lowest level since February. The picture is characterized by consumer restraint, lack of orders and persistently weak investment among businesses.

According to the Ifo institute, a recovery in Germany is a long time coming due to consumers’ reluctance to consume, a widespread lack of orders and continued weak investment. “The German economy has settled into recession,” Klaus Wohlrabe, head of Ifo surveys, told Reuters news agency on Monday. “We have been moving along the zero growth line for a long time.”

There could be a further decline in GDP in the third quarter, after a slight decline of 0.1 percent in the spring.

One reason for the misery: Consumers continue to pull back on shopping, choosing to save rather than spend their money in stores. “Consumption is not keeping up,” said Wohlraub, whose institute surveys thousands of businesses each month. “Consumers don’t really trust inflation to come down yet.”

Lack of demand in all industries

Businesses are also stingy. “We see a lack of investment,” the expert said. “This is driven by uncertainty in economic policy, and many companies are still complaining about a lack of orders across all industries.” And with export expectations also down in August, foreign demand is unlikely to be a lifeline for now – despite the strong global economy. “There are hardly any bright spots,” Wohlrabe summed up.

The mood in the German economy continued to deteriorate in August. The Ifo business climate index fell to 86.6 points from 87.0 points the previous month, the Munich Ifo institute previously reported in its survey of thousands of managers. It was the third straight decline and the lowest level since February. Economists polled had expected a drop to 86.0 points. (APA/Reuters)