Ifo business climate continues to fall – “Economy faces a difficult winter”

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The generally gloomy mood matches the assessment of the Bundesbank, which sees Germany on the cusp of recession.

(Photo: IMAGO/Nikita)

Berlin In view of the energy crisis, the mood in the executive floors of German companies continues to deteriorate. The Ifo business climate index fell in October to 84.3 points from the revised 84.4 points in the previous month, as the Munich Ifo Institute announced on Tuesday in its survey of around 9,000 executives.

However, economists surveyed by Reuters had expected a sharper decline to 83.3 points. Although those surveyed assessed their business situation as worse, they assessed the prospects as less bleak than recently. “Nevertheless, companies are looking to the next few months with concern,” explained the President of the Munich Institute, Clemens Fuest.

“The winter recession is coming,” added Ifo expert Klaus Wohlrabe in a Reuters interview. In the fourth quarter, the Munich researchers expect gross domestic product to fall by 0.6 percent compared to the previous quarter: “Almost two-thirds of companies are still suffering from delivery bottlenecks,” stressed Wohlrabe.

Inflation and uncertainty weigh Economy

The overall gloomy mood fits the assessment of the Federal Bankthe Germany on the verge of recession. She understands this to mean a clear, broad-based and long-lasting decline in economic output.

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High inflation and uncertainty about the energy supply are weighing on the German economy. The gross domestic product could already be loud in the past summer quarter Federal Bank no longer be grown.

>> Read here: Much higher gas price expected – Industry fears the domino effect of the energy crisis

For the data on gross domestic product (GDP) in the third quarter, which is due on Friday, experts polled by Reuters expect economic output to fall by 0.2 percent. In the spring, GDP growth was only minimal, at 0.1 percent.

“Companies remain in depression mode, the energy crisis is stifling economic life,” concludes Alexander Krüger, chief economist at Hauck Aufhäuser Lampe Privatbank AG. However, Helaba economist Ralfcircul also sees a small ray of hope in the Ifo sentiment data: “The increase in business expectations is pleasing. The recent fall in gas and electricity prices and the prospect of corresponding cost caps for companies and households may have had a positive effect here.”

More: Future prospects for companies continue to deteriorate – recession is becoming more likely

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