Expectations for the German economy unexpectedly declined sharply last month, according to the Ifo analysis agency.
The weakness of the German economy has become chronic, says Ifo CEO Clemens Fuest after the institute’s latest analysis of the climate in German business was presented on Tuesday.
The Ifo index, which is based on interviews with 9,000 German businessmen, fell in December to 84.7 from 85.6 in November.
The lackluster mood comes at a time of stagnation in the German economy and in the midst of the government crisis that the country has been plunged into after Prime Minister Olaf Scholz lost a vote of no confidence in the national parliament. It is heading towards new elections in February.
The German economy is largely based on exports and heavy industry, which is struggling against cheaper Chinese competitors, high energy prices and the threat of new tariffs in the United States.
In the second half of this year, negative GDP growth is expected again for the second year in a row, and the central bank expects only marginal growth next year.