The Ifo Institute's survey showed that sentiment among the German companies improved slightly in February, recording the first increase in the last three months and retreating from the lowest level since May 2020.
According to the report, the Ifo business climate index rose to 85.5, as expected, from 85.2 in January. The details of the report showed that the current situation sub-index did not change in February (86.9), while the January value was revised from 87.0 to 86.9. Economists had expected a decrease to 86.7. Meanwhile, the expectations index, which measures the six-month outlook from the business perspective, rose to 84.1 from 83.5 in the previous. Consensus estimates suggested an increase to 84.0 points.
"The German economy is stabilizing at a low level," said Ifo president Clemens Fuest, adding that Europe's largest economy shrank by 0.3% in 2023, making it the world's worst performing major economy.
Earlier this week, German Economy Minister Robert Habeck said that Germany's GDP is now expected to grow by just 0.2% this year. The revised GDP growth forecast is down from a previous estimate of 1.3%. Habeck said the government now anticipates German GDP to increase by 1% in 2025.