German CEO Sentiment Plummets to Near Pandemic Lows, Survey Reveals
berlin, Germany – Sentiment among German corporate leaders has sharply deteriorated, with a key index hitting its lowest level since May 2020, according to a survey released today by the Ifo Institute. The Ifo Business Climate Index for executives fell to 87.7 in July, down from 91.5 in June, signaling growing pessimism about the outlook for Europe’s largest economy.
The dramatic decline reflects mounting concerns over rising energy costs, persistent supply chain disruptions, and weakening global demand, threatening to further stall Germany’s economic recovery. The downturn impacts businesses across sectors, with particular anxiety centered on export-oriented industries vulnerable to a potential global recession. This shift in CEO outlook could translate into reduced investment and hiring, exacerbating existing economic headwinds.
The Ifo survey, which polled approximately 900 executives, revealed a significant drop in both current business assessment and expectations for the coming months. Executives expressed increased dissatisfaction with their current business situation, and their outlook for the next six months was markedly more pessimistic.
“The German economy is increasingly feeling the strain of the war in Ukraine,” said Klaus Wohlrabe, head of surveys at the Ifo Institute. “The rising energy prices are a major burden for companies, and the uncertainty about future developments is weighing on their investment decisions.”
Specifically, the index for manufacturing fell to 86.8 from 91.5,while the index for services dropped to 88.5 from 92.7. Construction was the only sector to show a slight betterment, with its index rising to 94.8 from 94.3.
The survey underscores the growing challenges facing the German government as it attempts to navigate the economic fallout from the war in ukraine and the ongoing energy crisis. Recent government measures aimed at easing the burden on businesses and consumers, such as energy price caps and financial aid packages, appear to be having limited impact on CEO sentiment. Further policy interventions may be necessary to prevent a deeper economic downturn.
