Germany's business prospects have improved, providing support for a moderate rebound in Europe's largest economy. But the country also faces the risk of a second recession in over a year. The Ifo Business Expectations Index rose to 84.7 in October, higher than the revised 83.1 from last month. This exceeds the median estimate of 83.5 in media surveys. The measurement indicators of the current situation also unexpectedly rose.
Clemens Foster, President of Ifo Research Institute, said in a television interview on Wednesday: "What we see here does indeed indicate that we have seen a certain degree of stability. The German economy will contract this year, but for the final quarter, we expect stability and slight growth
Germany has not achieved growth for over a year, and economist Fuel is even less optimistic, predicting that due to the energy crisis, Germany will experience contraction in the six months to December.
Manufacturing remains a weakness in the German economy. Chemical giant Lanxess AG announced last week that it will lay off 7% of its German employees due to energy shortages and plummeting global demand. This exacerbates the layoffs previously announced by BASFY. US. Volkswagen (VWAGY. US) has also lowered its performance expectations due to cost issues and supply disruptions.
The positive numbers mainly come from the service industry, such as IT and tourism
S& A business survey released by P Global on Tuesday showed that private sector activity contracted faster this month than in September, indicating a slowdown in economic growth and a decline in corporate and consumer confidence, which is unfavorable news for those who want to invest or operate. The deeper challenge is the rapid aging of German labor force and the need to shift trade relations from China to other countries, indicating that only slight growth can be achieved in the coming years. Some people are worried that Germany will repeat the mistakes of the "sick man" of Europe in the 1990s.
Senior officials, including Finance Minister Christian Lindner and German Federal Bank President Joachim Nagel, refuted this claim, stating that German industry can overcome the challenges it faces.