BERLIN (Reuters) – German business morale brightened in January as Europe’s biggest economy entered the new year with lower inflation and an improved outlook, a survey said on Wednesday.
The Ifo Institute said its business environment index rose to 90.2, up from 88.6 in December, in line with consensus by analysts polled by Reuters.
“The German economy is entering the new year with more confidence,” said Ifo President Clemens Festo.
The increase is due to a significant drop in pessimistic expectations, but businesses are somewhat unsatisfied with the current situation, Ifo said.
Ifo economist Klaus Wallrabe said: “There is probably no recession, but GDP could contract slightly in the first quarter.
Ifo’s rise comes alongside optimistic signals in other economic indicators, including German consumer sentiment, which strengthened February’s upward trend, and Germany’s Flash Composite Purchasing Managers Index, which rose for a third straight month in January. match. .
“Ifo’s business environment has rebounded strongly for the third time in a row, as the loosening of the gas market has further reduced fears of a deep recession for businesses,” said Commerzbank chief economist Jörg Kraemer. . But the index is still at levels where recessions have regularly occurred in the past, he added.
“A mild recession remains likely,” he said.
The German government will release revised economic forecasts late Wednesday. The government expects price-adjusted growth of 0.2% this year, far more optimistic than its fall forecast of a 0.4% contraction, according to a draft report obtained by Reuters.
Reporting by Miranda Murray, Rachel More, Rene Wagner and Klaus Lauer.Written by Maria Martinez, edited by Kirsty Noll and Tomasz Janowski
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