Tuesday , May 11 2021

"The German economy is on the way down"

The mood in the German economy is the lowest in three years, which was also surprised by analysts. They expected a fall in the index of the economic climate, but not so obvious. The respondents, with 9,000 enterprises involved, were not only black-and-white, but also in the future. After the fifth decrease, the index is at the lowest level since February 2016.

IndustryPHOTO: iStock

The mood in the German economy worsened at the beginning of the new year. The economic climate index, calculated by the Munich Institute for Economic Research Ifo, dropped by 1.9 points compared to December at 99.1 points. After the fifth decrease, the index is at the lowest level since February 2016.

The respondents did not assess only the current economic situation, but also the prospects for the next six months. The mood deteriorated in all major sectors of the economy – both in trade, as well as in services, construction and the industrial sector. "The economic climate has deteriorated in all major industrial sectors, except in the chemical industry, "said the president of the Ifo Institute Clemens Foust.

"The German economy is on its way,"said Fuest, commenting on the fall in the index. Recently, if it significantly reduced the forecast for Germany, the volume of gross domestic product this year will increase by only 1.1 percent, citing problems of the domestic automotive industry in confirming the new European standards exhaust emissions and car costs, as well as uncertainties such as Brexit and US trade policies.

Analysts, however, expected a decline in the index, but only 100.7 points, so that such a significant drop was a significant surprise. In December, the Ifo index dropped by one point to 101 points.

As in the case of each month, about 9,000 German companies participated.

The government intends to significantly reduce its growth forecasts in 2019. As it turned out today from circles close to the coalition, it plans to achieve economic growth of only 1 percent this year, while last autumn, Germany announced an increase of 1.8 percent for this year. Minister of Economy Peter Altmaier will present the new article on Wednesday.

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