Confidence of the German business world in the economy continues a downward trend

The Ifo business environment confidence index in Germany, which was 93.4 points last month, decreased to 91.7 points in May due to the sharp drop in the future expectations of company executives.

The Munich-based Institute for Economic Research (Ifo) published the results of the German Business Survey for May, which was conducted with the participation of approximately 9,000 companies.

Consequently, the business environment confidence index for industry and commerce in Germany, which was revised to 93.4 points in April, decreased to 91.7 points this month as company executives turned significantly pessimistic. in your expectations. The market expectation was that the index would drop to 93 points.

While the Ifo expectations index decreased from 91.7 to 88.6 points in Germany in May, the current situation index decreased from 95.1 to 94.8 points.

The Ifo survey indicated a further deterioration in the future prospects of the manufacturing and service sectors.

“GERMAN COMPANIES LOOK AT THE SUMMER WITH SUSPICION”

Ifo Chairman Clemens Fuest, in his assessment on the matter, stated that Ifo’s business environment confidence index fell for the first time in May after rising for six consecutive months, adding: “Managers were a bit less satisfied with their current situation. “German companies are skeptical about next summer,” he said.

ING Germany Chief Economist Carsten Brzeski claimed that the data in question accelerated concerns about the growth of the German economy, saying: “After the 6-month rise, the first drop in the Ifo index once again confirmed the decline. of optimism and new concerns about growth. We are not saying that the German economy will remain in recession for the next few years, but with some challenges in the short and long term, growth will be under pressure at best. he used the phrase.

THE GERMAN GOVERNMENT EXPECTS A GROWTH OF 0.4 PERCENT

According to main data from the German Federal Statistical Office (Destatis), the German economy did not grow in the first quarter of this year due to unusually high inflation and rising interest rates that suppressed consumer spending. Thus, after zero growth in the first quarter, the German economy did not enter “closely” into technical recession, which is expressed as “two quarters of GDP contraction”.

The economy contracted 0.5 percent in the last quarter of last year.

Although the bottlenecks that arose during the Covid-19 epidemic have eased, the country’s economy is negatively affected by the stagnation of demand due to the rise in interest rates, the decrease in confidence in the economy and the decrease in consumer purchasing power. in an environment of unusually high inflation.

The German government expects 0.4 percent growth in the economy this year. Leading German economic institutes predict the country’s economy will grow 0.3 percent this year.

Destatis will announce the final GDP data for the first quarter tomorrow. (AA)