The morale of entrepreneurs in Germany is at the lowest level since May 2020, in the midst of the Covid-19 pandemic, after falling more sharply than expected in December, yet another illustration of the German economic crisis.
(AFP / JENS SCHLUETER)
Published on Tuesday, the IFO barometer, an indicator closely followed by the business community, stood at 84.7 points in December, falling 0.9 points over one month.
This decline had not been anticipated by analysts at the financial platform Factset, who were instead banking on stagnation.
“The weaknesses of the German economy have become chronic,” notes the president of the Munich institute Clemens Fuest.
According to him, the decline in the indicator is due “in particular to more pessimistic expectations”, while companies “believe that their current situation has improved”.
Every month, the IFO surveys 9,000 business leaders on the current business situation and their expectations for the next six months.
In December, the climate deteriorated particularly in trade and the manufacturing industry.
Companies in this sector “do not see the end of the tunnel. This is why the downward trend in production (…) leads more and more often to job cuts”, analyzes Philipp Scheuermeyer, economist at the German public bank KfW.
Same situation for the services sector, weighed down by pessimism in transport and logistics, despite “a positive situation” in catering thanks to the Christmas holidays.
On the other hand, the morale of construction company bosses has improved.
Europe’s largest economy is expected to experience a second annual recession in a row and the growth outlook for 2025 is barely more optimistic.
Germany is suffering from a major industrial crisis, with social plans piling up, particularly in the automobile sector.
And the potential customs duties announced by Donald Trump, as well as the political uncertainty in Germany, two months before early elections, are also weighing on the morale of bosses.
