The Ifo Institute's survey showed that sentiment among the German companies worsened in August, recording the 4th decline in a row and reaching its lowest level since February amid pessimism about the performance of Europe's largest economy.
"The German economy is increasingly falling into crisis. Companies were both more pessimistic and assessed their current situation as worse", - said Ifo president Clemens Fuest.
According to the report, the Ifo business climate index fell to 86.6 from 87.0 in July. Economists had expected a decline to 86.0. The details of the report showed that the current situation sub-index fell to 86.5 from 87.1 in August, while economists also expected a drop to 86.5. Meanwhile, the expectations index, which measures the six-month outlook from the business perspective, fell to 86.8 from 87.0 last month (revised from 86.9). Consensus estimates suggested that the index would drop to 86.5 points.
According to the Bundesbank's Forecast for Germany, real GDP will increase by a calendar-adjusted 0.3% this year. In 2025 and 2026, the German economy will then grow by 1.1% and 1.4%, respectively. Meanwhile, the ifo Institute forecasts GDP growth of 0.4% this year and 1.5% in 2025.