Brandenburg Gate in Berlin, Germany

Germany Business Confidence January 2021

Germany: Business confidence deteriorates in January

Business confidence in Germany’s private sector fell from 92.2 in December to 90.1 in January, the lowest level since July last year as the index moved further below the 100-threshold that separates pessimism from optimism.

The downtick in the headline was driven by a deterioration in attitudes towards both the current climate and business expectations due to the second wave of Covid-19 and new lockdown measures since the middle of December. The drop in confidence was broad-based, with sentiment falling in all sectors. The steepest decline was recorded in the service sector. On the other hand, the assessment of the current situation in the manufacturing sector improved notably.

Clemens Fuest, president of the ifo Institute, commented: “The second wave of coronavirus has brought the recovery of the German economy to a halt for now.”

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

“With the current lockdown measures in place until mid-February and no significant easing in the offing immediately afterwards, the short-term outlook for the German economy is anything but rosy. As so often heard over the last year, it will take more momentum in the vaccination schemes and a further reduction in the number of infections before the economy can take off again. It currently looks as if it will take at least until spring time before this will be the case.”

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