Chancellor Friedrich Merz has failed to reverse the climate in Germany, as the new blow from the Ifo index confirms that the country's economy remains trapped in stagnation. The fall in business sentiment, combined with the persistent lack of growth, sends yet another strong danger signal for his government and for the prospect of recovery in the Eurozone's largest economy.
The Ifo Business Climate Index slightly declined to 88.1 points in November, down from 88.4 in October, performing worse than the market estimate which predicted 88.5.
The decrease stemmed exclusively from the expectations index, while the index for current conditions showed a slight improvement. This latest drop in the Ifo is consistent with the recent decrease in the Composite PMI, suggesting that the German economy remains in a weak position. The fiscal stimulus measures implemented by the government do not yet appear to be having a substantial impact on economic activity.
Weak growth for 2025 – Concerns for 2026
Germany's economic growth is expected to reach only 0.3% for the current year. Despite the prediction of some improvement in 2026, with an estimated GDP increase of 0.8%, this forecast remains lower than the general consensus of economists.
The Ifo results for November reinforce the indications that Europe's largest economy continues to face significant challenges, despite the government's efforts to stimulate growth.
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