The mood in the executive floors of German companies brightened up surprisingly in November. The Ifo business climate rose by 1.8 points to 86.3 points compared to the previous month, as the Ifo Institute announced on Thursday. In addition, the value for the previous month was revised upwards. Accordingly, the most important German economic barometer had already risen in October for the first time since May.
Economists had expected better corporate sentiment, but had assumed 85 points for November. Although the companies were less satisfied with their current business, the pessimism with regard to the coming months eased noticeably.
Experts give a cautious all-clear
“The recession is likely to be less deep than many expected,” said Ifo President Clemens Fuest. From the point of view of the top economist, the mild climate so far, full gas storage facilities and the concrete plans for LNG terminals speak for a slight brightening of the economic picture.
The first LNG conversion ship in Germany arrives at the terminal in Lubmin (Mecklenburg-West Pomerania).
“Hooray, the end of the world is missing!”, Thomas Gitzel, chief economist at VP-Bank, reacted in a first statement. Gas shortages, blackouts, missing materials and the financial market crisis have been the buzzwords of the past few weeks. But to everyone’s astonishment, the German economy recorded better-than-expected growth in the third quarter. “So the current situation is far less bad than the general mood. This is also reflected in the Ifo business climate index.” There is a big gap between the companies’ assessment of the current situation and future business prospects.
Jörg Krämer, chief economist at Commerzbank, expects “a further recession, but no economic collapse more than ever.” Jen-Oliver Niklasch from LBBW believes that people are moving out of the zone of fear of doom and into the area of normal worries about a recession. “The expectations were catastrophic, now they’re just bleak.” In view of the expected recession, there is little reason for relief, despite the clear increase in the Ifo business climate index. “It is undisputed that Germany is slipping into a recession, but it will not be the feared crash,” said Andreas Scheuerle from Deka-Bank.
Economy downturn flattens out
According to the Bundesbank, Germany is facing a winter recession. But a gas shortage could probably be avoided. And the latest survey data from financial services provider S&P Global suggests that the economic slide has already moderated in November as price pressure eased. In the summer quarter, the economy was still growing due to the lifting of many corona measures. Gross domestic product increased by 0.3 percent from July to September.
ul/hb (rtr, dpa)