Recession in Germany continues while business confidence declines for the second month in a row
Germany faces an uphill battle to shake off the recession after a slump in business confidence.
In another setback for Europe’s largest economy, the influential IFO institute said private sector morale fell for a second straight month in June.
“Sentiment in the German economy has become noticeably clouded,” said Clemens Fuest, the chairman of the German economic think tank.
The findings fueled fears that Germany – dubbed ‘the sick man of Europe’ because of its economic woes – could face another quarter of contraction after falling in the last three months of last year and the first three months of 2019. this year.
That would prolong the recession in the country and confirm Germany as the laggard of the G7 economies.
Ongoing recession: morale in the German private sector has fallen for the second month in a row
The German economy contracted by 0.5 percent in the last quarter of 2022 and by another 0.3 percent in the first quarter of 2023.
“The likelihood has increased that GDP will also contract in the second quarter,” said Klaus Wohlrabe, head of surveys at the IFO.
Independent economists agreed. ING’s Carsten Brzeski: ‘The optimism at the beginning of the year seems to have given way to more realism.’
Franziska Palmas, from Capital Economics, added: “German GDP is likely to have contracted for the third quarter in a row.”
Commerzbank’s chief economist Joerg Kraemer said: “We feel confirmed in our forecast that the German economy will contract again in the second half.