High energy costs and continuing uncertainty due to the war in Ukraine: the mood in German companies is currently negative.
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The mood of the German economy deteriorated significantly in September. Ifo business sentiment fell 4.3 points to 84.3 points from the previous month, as announced Monday by the Ifo Institute in Munich. This is the lowest level since May 2020. Analysts had expected a slowdown, but only at 87.0 points. In the previous months, the mood had mostly worsened.
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“The German economy is sliding into a recession,” commented IFO president Clemens Fuest. The interviewed companies rated both their current situation and the expected development worse.
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The economic climate was also clouded in all sectors considered, namely in industry, service providers, trade and construction. In retail, business expectations have fallen to historic lows, the Ifo Institute said.
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Uncertainties remain due to the war in Ukraine
The German economy is suffering from a multitude of critical developments. First, there is Russia’s war in Ukraine, which has greatly increased insecurity. In addition, there is the energy crisis, especially in the natural gas sector, the continuing problems of world trade and the sharp rise in central bank interest rates in many places. It should not be forgotten that the corona pandemic has not yet been overcome and that the burdens come mainly from China due to the strict anti-virus policy of the local management.
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