Data published by the Ifo Institute showed that the business climate in Germany declined markedly in September, falling below economists' forecasts, which was due to inflation concerns.
In September, the business climate index fell to 84.3 points compared to 88.6 points in August (revised from 88.5 points). That's the lowest level since the aftermath of the COVID-19 pandemic shock in May 2020. Economists had expected a decline to 87.0 points. The current assessment index declined to 94.5 points from 97.5 points last month, which was lower than consensus estimates (96.0 points). Meanwhile, the expectations index, reflecting the forecasts of companies for the next six months, fell to 75.2 points from 80.5 points in August (revised from 80.3). Economists had expected a drop to 79.0 points.
The Ifo Institute reported that almost all sectors of the economy are recording a decline, retail business expectations are at a historic low, and more than every second company expects prices to rise. "Given all this, we believe that the German economy is facing a recession," the Ifo Institute economists said.