German industry reports weak incoming orders.
(Photo: dpa)
Munich The mood in the German economy continued to deteriorate significantly during the recession. The Ifo business climate fell surprisingly sharply in June to 88.5 points from 91.5 points in the previous month and thus for the second time in a row, as the Munich Ifo Institute announced on Monday in its survey of around 9000 executives.
Experts surveyed by the Reuters news agency had only expected a drop to 90.7 points. “The weakness in industry in particular is putting the German economy in difficult waters,” said Ifo President Clemens Fuest. Managers were more skeptical about their current business and their prospects far more unfavorable than before.
“In almost all sectors, the mood clouded over in June,” said Ifo survey manager Klaus Wohlrabe. “There are hardly any rays of hope.” Pessimism has returned, particularly in industry. “The reason is a strong weakness in demand,” said the expert. The order cushion would also become thinner. Not only domestic demand but also export expectations in industry have decreased. “The worldwide interest rate increases are dampening the demand for goods ‘Made in Germany’.”
There are signs of further easing, at least in terms of inflation. The proportion of companies planning to raise their prices in the coming week fell in June. “Especially with the consumer-related service providers, we still see price increases,” said Wohlrabe. These included the areas of gastronomy and tourism.
The German economy shrank at the end of 2022 and beginning of 2023 compared to the previous quarter. According to a rule of thumb of experts, it is therefore in a technical recession. The head of the economics, Monika Schnitzer, is largely assuming stagnation for the current year. “Growth will be plus/minus zero,” the government adviser and chair of the Advisory Council recently told Reuters.
There will probably be a recovery from the second half of the year. “That depends on China.” However, the European Central Bank’s rate hike course is increasingly having an impact on the economy and is slowing down the economy.
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