Get 40% Off
🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

German business sentiment rises in March, Ifo says

Published 03/22/2024, 05:26 AM
Updated 03/22/2024, 06:20 AM
© Reuters. FILE PHOTO: Construction sites are photographed in Frankfurt, Germany, July 19, 2023. REUTERS/Kai Pfaffenbach/File Photo
CBKG
-

By Maria Martinez

BERLIN (Reuters) -German business morale improved in March and beat expectations, a survey showed on Friday, though probably not enough to prevent Europe's biggest economy from slipping into another recession.

The Ifo institute said its business climate index stood at 87.8 compared with a reading of 86.0 forecast by analysts in a Reuters poll.

"The German economy glimpses light on the horizon," said Ifo president Clemens Fuest.

Companies' expectations turned much less pessimistic in March and assessments of the current business situation also improved, the survey showed.

"The strong gain in the Ifo business climate gives us hope," said Joerg Kraemer, chief economist at Commerzbank (ETR:CBKG).

He said the dampening effect of massive increases in interest rates and energy prices is beginning to fade.

"However, an end to the recession in the summer half-year should not be confused with a genuine upturn," Kraemer warned.

Germany is broadly expected to enter another technical recession in the first quarter of this year, after its economy shrank by 0.3% in the final quarter of last year.

Germany's economic downturn eased slightly in March as business activity in the country’s service sector came close to stabilising, the HCOB German Flash Composite Purchasing Managers' Index(PMI), compiled by S&P Global, showed on Thursday.

"We think the pick-up in March is the beginning of a more sustained rise in both surveys," said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, in reference to the PMI and the Ifo survey.

ING's global head of macro Carsten Brzeski cautioned: "Before popping the corks, let's not forget that today's reading is still far lower than levels seen last summer."

Germany's gross domestic product (GDP) shrank by 0.3% in 2023, making it the world's worst performing major economy.

© Reuters. FILE PHOTO: Construction sites are photographed in Frankfurt, Germany, July 19, 2023. REUTERS/Kai Pfaffenbach/File Photo

The government expects the economy to grow 0.2% this year as weak global demand, geopolitical uncertainty and persistently high inflation dent hopes for a swift rebound.

"Even if sentiment indicators have improved somewhat, any recovery of the German economy looks set to be weak this year," Brzeski said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.