The Ifo Institute's survey showed that sentiment among the German companies improved markedly in October, recording the first increase in the last 6 months, and retreating from the lowest level since January.
According to the report, the Ifo business climate index rose to 86.5 from 85.4 in September. Economists had expected an increase to 85.6. The details of the report showed that the current situation sub-index rose to 85.7 from 84.4 in September, while economists expected the index to remain unchanged. Meanwhile, the expectations index, which measures the six-month outlook from the business perspective, increased to 87.3 from 86.3 last month. Consensus estimates suggested that the index would rise to 86.8 points.
According to the latest forecasts by the Ifo Institute, Germany's economy is likely to stagnate this year. Ifo also said it expects the economy to grow by 0.9% next year and by 1.5% in 2026.
Earlier this week, the International Monetary Fund cut its forecast for German GDP growth for the current year to 0% from +0.2%. This downward revision follows a cut in the German government's forecasts to a 0.2% contraction in 2024 from 0.3% growth previously expected. The IMF now predicts that the German economy will grow by 0.8% in 2025, which is 0.5% lower than the previous forecast.