“The weakness of the German economy has become chronic”

In the last month of 2024, the business climate in Germany continued to show no recovery overall. This emerges from the monthly statistics from the Ifo Institute. The business climate index fell to 84.7 points in December, after 85.6 points in November. The index has thus reached its lowest value since May 2020. The pessimistic expectations of companies were particularly decisive for the development, while more companies rated their current situation somewhat better. “The weakness of the German economy has become chronic,” said Clemens Fuest, President of the Ifo Institute.

The manufacturing sector in particular showed a noticeable decline in December. Companies became more dissatisfied with current business, and expectations also deteriorated significantly. The order situation deteriorated and production cuts were also announced. The mood in the service sector also remains tense, even if the current situation is assessed as somewhat better.

In trading, where an upward movement was observed in the last two months, the trend could not continue in December. Current business is not going well and expectations for the future are rather pessimistic. This development can be observed particularly in wholesale, while in retail the mood remains dissatisfied, but to a lesser extent. In comparison, the construction industry is showing an improvement in the business climate. Companies would assess their situation somewhat better at the end of the year, but overall expectations remained at a pessimistic level.