German business sentiment brightens in February, says Ifo survey.

26 Feb, 2024

German business sentiment brightens in February, says Ifo survey.

German business sentiment saw a modest improvement in February, according to a survey released on Friday. However, this upturn may not be sufficient to prevent Europe's largest economy from sliding into another recession. The Ifo institute reported that its business climate index edged up to 85.5 from 85.2 in January, aligning with expectations from analysts polled by Reuters.

Ifo President Clemens Fuest commented that the German economy appears to be stabilizing at a low level. Since the 2022 invasion of Ukraine by Russia, which led to increased energy costs, Germany has faced challenges. Its industrial-heavy economy has endured four consecutive quarters of zero or negative growth, adversely affecting the entire eurozone.

In 2023, Germany's GDP contracted by 0.3%, marking it as the worst-performing major economy globally. The country is anticipated to enter another technical recession in the first quarter of this year, as confirmed by the federal statistics office.

Despite the slight uptick in sentiment, experts caution against overly optimistic expectations. The index measuring current conditions remained unchanged in February, standing at 86.9, slightly exceeding forecasts.

The German government revised down its economic growth forecast for the year to 0.2%, citing weak global demand, geopolitical uncertainty, and persistent inflation as factors impeding recovery prospects. Economists stress the need for brighter expectations in the upcoming months for a more significant economic turnaround.