FX.co ★ Germany’s economy gets stuck in recession

According to the estimates provided by the Ifo Institute, the German economy slid into a recession. The situation was aggravated by the worsening business climate.

Analysts at the Ifo Institute reported that the German economy, which is considered the largest one in the eurozone, had plunged into recession. This is confirmed by a deep recession in manufacturing and other key sectors. Experts fear that this trend will continue in the medium term.

Notably, the Ifo business climate index is based on a survey of representatives of 9 thousand German enterprises. It is a key indicator of local business sentiment.

The organization emphasized that at the beginning of 2024, expectations about the prospects of the German economy deteriorated significantly. They became more pessimistic compared to the end of 2023. In December last year, the business climate index in Germany was estimated at 86.3 points, and in early January, it fell to 85.2 points.

At the same time, many analysts had anticipated the business climate index to rise to 86.6 points. However, the recent figures disappointed them. Currently, business sentiment is worsening. This points to the fact that the German economy is experiencing a deep recession.

Earlier, Carsten Brzeski, the Global Head of Macro for ING Research, assumed that the German economy was unlikely to emerge from the recession in 2024. Disruption of global supply chains, rising energy prices, high inflation rates, and falling demand from China are the difficulties that the German economy will face this year. ING emphasizes that China is still one of Germany's main trading partners.