BERLIN (Reuters) – The business climate in Germany deteriorated more than expected in June, the monthly survey by the economic research institute Ifo showed on Monday, indicating that Europe’s largest economy is facing difficulties for out of the recession.
The business climate index fell from 91.5 to 88.5 as economists and analysts polled by Reuters on average expected a drop to 90.7.
The component of the judgment of business leaders on their current business conditions fell to 93.7 after 94.8 last month and that measuring the evolution of their expectations also fell, to 83.6 in June after 88, 3.
The economy faces the prospect of a longer recession due to weaker domestic demand and exporter expectations, Klaus Wohlrabe, director of Ifo surveys, told Reuters.
“The likelihood of gross domestic product contracting in the second quarter has increased,” he added.
Weaker than expected economic indicators in China since the end of health restrictions, the specter of a recession in the United States and the tightening of monetary policies seem to be playing negatively on the sentiment of entrepreneurs, said Carsten Brzeski, global head of the macroeconomics at ING
“What is clear is that the optimism at the start of the year seems to have given way to a greater sense of reality,” added the economist.
The fall in the Ifo index echoes that of the PMI indices published on Friday, under the combined effect of slower growth in activity in services and a marked contraction in industry.
(Maria Martinez, French version Laetitia Volga, editing by Kate Entringer)
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