Business Sentiment in Germany Deteriorates More Than Expected

Foreks - Business confidence in Germany deteriorated more than expected in December. According to a survey conducted by ifo, the business climate index fell to 84.7 in December from a revised 85.6 the previous month. Analysts had anticipated that the decline would be limited to 85.5.

This drop was attributed to companies' pessimistic assessments for the coming months, driven by geopolitical uncertainties and an industrial slowdown in Europe’s largest economy. The ifo survey, which included nearly 9,000 company executives, indicated an improvement in the assessment of current conditions; the current situation index moved positively from 84.3 to 85.1.

However, the expectations index surprisingly fell from 87.0 in November to 84.4 in December, whereas economists had predicted the index would increase to 87.5. In a vote in the Bundestag, Chancellor Olaf Scholz's government failed to receive a vote of confidence, initiating an early election process in the country. The prospect of Donald Trump being reelected as US president further contributed to the worsening outlook, combined with political deadlock.