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Germany Business Confidence December 2021

Germany: Business confidence drops again in December

The Ifo Business Climate Index fell from 96.6 in November to 94.7 in December, marking the lowest reading in nearly a year. As a result, the index fell further below the 100-threshold that separates pessimism from optimism among firms.

The deterioration was largely attributed to risings pessimism with regards to the current business situation and expectations, weighed on by surging new Covid-19 infections.

Carsten Brzeski, global head of macro at ING, warned:

“Today’s Ifo index gives a first impression of how the current fourth wave of the pandemic could hurt the German economy, and this impression is not very promising. Despite a strong start to the fourth quarter in terms of industrial activity, ongoing supply chain frictions, higher inflation in general, and higher energy and commodity prices in particular, do not bode well for the short-term outlook for the German economy. The fourth wave of the pandemic could now actually push the economy to the brink of stagnation, or even into a technical recession, even if, admittedly, the adaptability of the economy to lockdowns, supported by government and central bank measures, has clearly increased since March 2020.”

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