Economic indicators for Europe's largest economy continue to show poor performance. According to analysts, expectations related to the key manufacturing sector remained "severely disappointing". German business data fell for the fourth month in a row in August. The results of a key survey released on Friday deepened the sense of gloom in Europe's largest economy.

Read More

IFO Institute's Business Climate Index

Germany's business data fell from 87.4 to 85.7 points last month on the IFO Institute's Business Climate Index, which measures the German economy's business environment based on a monthly survey. This survey consisted of the opinions of nine thousand companies.

FactSet had Expected an improved rating of 86.8 points

Analysts polled by financial data company FactSet had expected an improved rating of 86.8 points. The poor results of the study came as final official data confirmed that the economy stagnated in the second quarter as the country still grapples with various economic challenges, including high inflation.

IFO President Clemens Faust

"Sentiments among German managers have darkened further," IFO President Clemens Faust said in a statement. He said that the situation was very disappointing. Noting all this, he said that the business environment in the service sector, trade, and construction has also deteriorated to a disappointing extent.

Survey Highlighted

LBBW Bank's Elmer Volcker said the survey highlighted an "increasingly negative trend" around the German economy, adding, "The already bleak outlook has become even bleaker." The German economy has been in crisis since Russia invaded Ukraine last year. Food and energy costs have risen since Russia cut key gas exports to Europe.

Comparing July to June, production dropped by 0.8%. Reuters surveyed 

analysts, who expected a 0.5% fall.

Poor Economic

It fell into recession at the end of the year after two consecutive quarters of poor economic performance, the technical definition of a recession. The eurozone's aggressive rate hikes to curb high inflation are also weighing on the economy, while weakness in key foreign markets has hit exporters and producers hard.

IFO survey

Fritzi Koehler-Gibe, chief economist at public lender FW, said the IFO survey was "once again disappointing" but there were also glimmers of hope. He explained, "I am sitting on the recovery of cost in the second half of the year thinking that now there will be an increase in the income, the cost will be managed to some extent, which will now increase the income substantially and the inflation pressure will be reduced." Expected to get rid of. pressures after last winter's downturn." However, he added that the situation is still difficult for the industry. Germany's leading economic institutions expect the country's economy to shrink by 0.2 to 0.4 percent during 2023.

Read More