The Ifo Institute's survey showed that sentiment among the German companies worsened in July, recording the third decline in a row and reaching its lowest level since February amid increasing pessimism about the performance of Europe's largest economy.
According to the report, the Ifo business climate index fell to 87.0 from 88.6 in June. Economists had expected an increase to 89.0. The details of the report showed that the current situation sub-index fell to 87.1 from 88.3 in June, while economists had expected growth to 88.5. Meanwhile, the expectations index, which measures the six-month outlook from the business perspective, fell to 86.9 from 89.0 last month. Consensus estimates suggested that the index will remain at 89.0 points.
According to the latest IMF forecasts, German GDP will grow by 0.2% this year and 1.3% next year, after declining 0.2% in 2023. The German economy has begun to recover from the energy-price shock, and gradual economic recovery is expected to continue this year, the IMF said. The financial agency forecasts headline inflation in Germany falling to 2.5% this year and 2.2% next year, after 6% in 2023, while it expects core inflation to come in at 3% in 2024 and 2.3% in 2025, following 6.3% last year.