German economy stuck in recession as business climate worsens

"Sentiment among German companies has deteriorated further at the beginning of the year. The ifo Business Climate Index fell to 85.2 points in January, down from 86.3 points in December," the institute emphasised. Analysts expected the key indicator for the German economy to rise to 86.6 points. However, companies' expectations for the coming months were more pessimistic. "The German economy is stuck in recession," Ifo head Clemens Füst commented on the results.

The business climate index showed growth in the manufacturing sector, but declined significantly in the services sector, where there was a deterioration in the assessment of the current situation and an increase in dissatisfaction with the order book. Companies' expectations also became more pessimistic. In trade, the index reached its lowest level since October 2022, while the downward trend continued in the construction sector.

The Ifo Business Climate Index is based on a survey of approximately 9,000 German companies and is considered a key indicator reflecting the state of the German economy.

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