Updated March 22nd, 2024 at 17:22 IST

German business climate improves, recession still looms large

The Ifo institute revealed that its business climate index reached 87.8, surpassing the forecasted 86.0 in a Reuters poll.

Reported by: Business Desk
Flag of Germany | Image:Pexels

German business sentiment surges: German business sentiment increased in March, surpassing expectations, according to a report from the Ifo institute. Despite this positive development, it may not be sufficient to prevent Europe's largest economy from sliding into another recession.

The Ifo institute revealed that its business climate index reached 87.8, surpassing the forecasted 86.0 in a Reuters poll. Clemens Fuest, president of Ifo, expressed optimism, stating, "The German economy sees a glimmer of hope."

The survey indicated a major improvement in companies' expectations for the future, as well as better assessments of the current business situation.

Joerg Kraemer, chief economist at Commerzbank, welcomed the strong increase in the Ifo business climate, stating, "This gives us hope." He highlighted that the negative impact of substantial increases in interest rates and energy prices appears to be diminishing.

However, Kraemer cautioned against mistaking the potential end of the recession in the upcoming months with a true economic upturn. Germany is expected to enter another technical recession in the first quarter of the year, following a 0.3 per cent contraction in the final quarter of the previous year.

(With Reuters Inputs)

Published March 22nd, 2024 at 17:22 IST