The Ifo Institute's survey showed that sentiment among the German companies fell again in December, reaching its lowest level since May 2020.
According to the report, the Ifo business climate index fell to 84.7 from 85.6 in November (revised from 85.7). Economists had expected the index to be 85.6. The details of the report showed that the current situation sub-index rose to 85.1 from 84.3 in November, while economists predicted a decline to 84.0. Meanwhile, the expectations index, which measures the six-month outlook from the business perspective, declined to 84.4 (the lowest value since January) from 87.0 last month (revised from 87.2). Consensus estimates suggested that the index would rise to 87.5 points.
According to the latest forecasts by the Ifo Institute, German GDP is likely to shrink by 0.1% this year, and will grow by only 0.4% next year if it fails to overcome structural challenges but can achieve 1.1% growth if the right economic policy course is set. Due to major uncertainty, the Ifo Institute is presenting two scenarios for the current economic forecast. The economic institute had forecast 0.9% growth in its September forecasts.