No recovery in sight for German business climate index

Source: Xinhua | 2019-07-26

The mood in the executive floors of the German economy fell to its lowest level in more than six years to 95.7 points, the Munich-based Institute for Economic Research (Ifo) announced on Thursday.
This was the fourth consecutive decline and the lowest business climate index value since April 2013, according to the German economic institute's monthly survey of around 9,000 managers.
"The German economy is in difficult waters," as the barometer for the business climate in July fell by 1.8 points compared to the previous month, said Ifo president Clemens Fuest.
German companies were less satisfied with their current business situation and were more skeptical about their future business development, Fuest noted.
According to Ifo, the mood in the German manufacturing industry was "in free fall" and a stronger decline had last been observed in February 2009.
Ifo was not expecting the situation to improve for the time being, as German companies "are more pessimistic about the coming six months".
The business climate also deteriorated in the German services sector and expectations were pessimistic for the first time since July ten years ago, according to Ifo.
The "positive exception" to the pessimistic mood among German companies was in the construction industry, where the mood had brightened, Ifo president Fuest noted.
The business climate index in the German construction industry had risen slightly by 0.3 points to 23.3 points in July 2019, according to Ifo.
"The enormous political uncertainty, in particular due to the trade conflicts, makes it difficult for the export-dependent industry to cope," Philipp Scheuermeyer, macroeconomic and global economic expert at the German state-run development bank KfW said.
On Monday, the German Bundesbank noted in its monthly report that "German economic output is likely to have declined slightly in the second quarter of 2019".
The International Monetary Fund (IMF) also reduced its expectations slightly for Germany's economic growth.
On Tuesday, the IMF predicted that German gross domestic product (GDP) would increase by 0.7 percent this year instead of the previously forecast 0.8 percent.