Financial circumstances - The business climate has reached a standstill, with prospects for improvement still uncertain.
The atmosphere in the German economy stayed the same in May after a brightening in the earlier months. The Ifo business climate stayed steady at 89.3 points, as the Ifo Institute stated on Monday in Munich. Experts had predicted an increase to an average of 90.4 points. "Cold shower for optimists," stated the ING Bank.
"The German economy is slowly emerging from the crisis," elucidated Ifo President Clemens Fuest about the numbers. In the previous months, the business climate indicator increased three consecutive times, which is commonly taken as a turning point in the economy. However, Germany's most significant economic indicator still sits at a rather low level.
Thousands of companies were surveyed
The surveyed companies evaluated their expectations for future business in May more positively, but their current situation less favorably. The business climate improved in industry, trade, and construction, but worsened in the service sector.
"German companies are becoming more optimistic, but only with an eye on the future," remarked Andreas Scheuerle, top industry executive at Dekabank. "The economy's breakout from the lasting economic slump will not succeed in the first half of the year, in their opinion."
Reasons for recovery remain
"Following several positive economic data surprises in the last weeks, this is slightly disappointing," observed economist Elmar Völker from Landesbank Baden-Württemberg (LBBW). Notwithstanding, the global economic situation has stabilized, the inflation pressure is gradually declining, and the European Central Bank (ECB) is close to cutting interest rates. All these are reasons for the German economy's recovery in the upcoming months. Völker mentioned, "The trees aren't growing into the sky."
The analysts at Landesbank Hessen-Thüringen were shocked by the stagnation. Other economic indicators have gone up recently, like the S&P Global purchasing managers' indices or the ZEW economic expectations. The economic development appears to be improving at a snail's pace, explained analyst Ulrich Wortberg.
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The economic situation in Germany, as indicated by the Ifo business climate, remains uncertain, despite a predicted improvement. Clemens Fuest, the President of the Ifo Institute based in Munich, mentioned that the German economy is slowly emerging from the crisis, but the business climate indicator is still below average. The stagnation in the economic recovery was a disappointment to some analysts, who pointed out reasons like stabilized global economic situation and declining inflation pressure as potential reasons for improvement in the upcoming months. Despite this, ING Bank expressed disappointment with the current economic situation and the slow pace of recovery.
Source: www.stern.de
