German Ifo Business Climate Index declined to 84.7 in December, missing expectations of 85.6 and falling from 85.7 in November. This drop highlights persistent economic challenges in Europe’s largest economy, with sentiment continuing to slide amid growing uncertainty. While Current Assessment Index surprised to the upside, rising to 85.1 (above forecasts of 84.0), Expectations Index fell sharply fro 87.0 to 84.4, undershooting the anticipated 87.5.
Sectoral data painted a concerning picture. Sentiment in manufacturing dropped further, from -22.0 to -24.8. Services sector weakened from -3.5 to -5.6. Trade saw a sharper decline from -26.6 to -29.5. Meanwhile, the only bright spot came from construction, where sentiment improved from -29.0 to -26.1, though it remains firmly in negative territory.
The Ifo Institute underscored the gravity of the situation, warning that “the weakness of the German economy has become chronic.”
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