Sentiment among companies is improving again, but economists warn against overconfidence.
(Photo: dpa)
Munich The mood in the executive floors of German companies brightened in February for the fourth month in a row. The Ifo business climate index rose to 91.1 points from 90.1 points in the previous month, as the Munich Ifo Institute announced on Wednesday in its survey of around 9,000 executives. Economists surveyed by the Reuters news agency had expected the increase to 91.2 points.
“The German economy is gradually working its way out of its weak phase,” said Ifo President Clemens Fuest. Although companies were less satisfied with current business than in January, expectations for the next six months increased.
But the Ifo warns against too much confidence. “The German economy will not be able to avoid a recession,” said the head of the Ifo surveys, Klaus Wohlrabe. “But this will be mild.” Gross domestic product shrank by 0.2 percent at the end of 2022. If it goes down for the second time in a row in the current first quarter, economists speak of a technical recession.
According to Wohlrabe, private consumption in particular is likely to weaken. Many car purchases were brought forward to the end of 2022, while many consumers are now faced with significantly higher down payments from their municipal utilities for energy. “As a result, consumption should develop weaker.”
Recently there have been mixed economic signals. The purchasing managers’ index for the private sector – industry and service providers together – rose for the fourth month in a row in February and signaled growth for the first time in eight months.
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