“The German economy is stalling”
“It is simply not clear that the German economy can overcome this crisis”
The Ifo business climate index is falling for the fifth time in a row. Experts are skeptical as to whether a recession can be avoided this year. WELT economic expert Dietmar Deffner speaks with Ifo President Clemens Fuest.
The Ifo business climate index fell only minimally in September, but it was still the fifth decline in a row. Chief economist Jörg Zeuner from Union Investment says: “The worst could soon be behind us.”
Dhe mood in the executive suites of German business barely worsened in September. The Ifo business climate only fell slightly by 0.1 points to 85.7 points compared to the previous month, for the fifth time in a row as the Munich Ifo Institute announced on Monday in its survey of around 9,000 managers. Experts polled by Reuters had expected a sharper decline to 85.2 points. Although companies were more dissatisfied with current business, they were less skeptical about their prospects than before. “The German economy is treading water,” said Ifo President Clemens Fuest.
At the end of 2022 and the beginning of 2023, Europe’s largest economy shrank for two quarters in a row before stagnating in the spring. Many experts also expect shrinkage for the current year as a whole. “The gross domestic product is likely to have fallen in the third quarter,” said Ifo economic expert Klaus Wohlrabe, looking ahead to the summer. “The industry is struggling with falling orders from home and abroad, and rising interest rates worldwide are having an impact.” This is dampening demand for German goods.
In the service sector, the business climate fell for the sixth time in a row, while in retail there was a slight improvement. “This was due to less pessimistic expectations,” Fuest explained. However, traders are less satisfied with current business. “The construction industry remains the problem child,” said Wohlrabe. In the construction industry, the business climate indicator fell to its lowest value since January 2009. “The industry remains in crisis mode.”
A deep slump in the economy as a whole is not to be expected, said chief economist Jörg Zeuner from Union Investment. “So the worst could soon be behind us.”
