The economy experiences a gradual recovery.
In the halls of German companies, there's a slight decrease in confidence about the economy. Businesses seemed less secure than before, with new orders coming at a slower pace. However, experts still believe the recovery is intact, although cautiously.
After third straight improvements, the mood within the German economy appears surprisingly stuck. IFO President Clemens Fuest stated, "The German economy is steadily coming out of the crisis." The IFO business climate held steady in May at 89.3 points, following a survey of around 9,000 managers. Experts had anticipated an increase for May, describing it as a letdown.
Companies' own evaluations of their business situation were worse than before, but their forecasts for the coming months were more hopeful. Industries, traders, and construction firms were recovering while service providers experienced a decline. The business climate in the manufacturing industry improved for the third consecutive time.
Businesses felt better about their current situation, but their expectations were less pessimistic, according to Fuest. "However, the order backlog continued to decline." The index rose significantly in retail. "Business expectations improved substantially, but remain skeptical." The main construction industry saw another increase. "Shortages of orders continue to be a major challenge," experts noted. "The economy may grow again in the current spring quarter."
Expert: Ampel's policies don't halt the erosion of location quality
Financial analyst Elmar Völker from LBBW noticed a slight wane in optimism but expects continuous economic recovery. "Growth doesn't happen overnight." Chief economist Alexander Krüger from Hauck Aufhäuser Lampe Private Bank noted persistent order shortages, declining incomes, high interest rates, and unsettling economic policy as struggles. "A meager growth is the best we can feel for now."
Commerzbank's Chief Economist Jörg Krämer predicted the economy wouldn't see significant growth in the current second quarter. He suggested that the recovery might only be stable half a year later. "Nonetheless, the upturn should be tame, since the federal government has not aggressively addressed the long-term deterioration of our location quality."
KfW: The valley has been passed
The economy managed to steer clear of a recession at the beginning of the year due to rising exports and spending in construction. It expanded by 0.2% between January and March, unchanged from the past year. The Bundesbank and other experts think the recovery will continue in the current second quarter. "The economic recovery should mostly be behind us," said KfW's Chief Economist Fritzi Köhler-Geib.
To power forward, private consumption should contribute - not least due to abating inflation. Retail experienced a slight increase in May. "Yet, there's still plenty of space for growth," said IFO expert Wohlrabe. "Consumers are still holding back."
Conclusively, the overall GDP - the sum of all produced goods and services - is expected to increase by 0.3% in 2024, according to the German federal government's prediction. However, the German Industry and Commerce Chamber (DIHK) predicts on the basis of a survey of 24,000 companies in every sector and region, no significant growth.
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The Ifo Index, a key indicator of the German economy's business climate, remained steady in May at 89.3 points, despite experts expecting an increase. This was a letdown, as companies' own evaluations of their current situation were worse than before, but their forecasts for the coming months were more hopeful. (Ifo Index, economic situation, economic growth)
Despite the challenges such as persistent order shortages, declining incomes, high interest rates, and unsettling economic policy, financial analyst Elmar Völker from LBBW still expected continuous economic recovery, albeit at a slow pace. He agreed with chief economist Alexander Krüger from Hauck Aufhäuser Lampe Private Bank who predicted a meager growth for the current period. (Ifo Institute, economic situation, economic growth)
Source: www.ntv.de
