Germans think their economy is going downhill

Germans are bearish on the economy.

The CESifo released their latest measures of sentiment among German businesses on Tuesday and the results show that while things are good at the moment, people are preparing for a downturn.

The CESifo surveys 7,000 enterprises across Germany to gauge their assessment of the current economic climate and how they think it will develop. February’s assessment of current conditions beat forecasts, coming in at a measurement of 112.9 against a forecast of 112.0.

But the score for expectations — how the economy will fare in the future — was a big miss to forecasts: just 98.8 against an expected 101.6.

Business climate — how easy it is to do business at the moment — also disappointed: 105.7 against a forecast of 106.7.

Hans-Werner Sinn, president of the IFO Institute, says: “The majority of companies were pessimistic about their business outlook for the first time in over six months.”

He writes in the release announcing the results:

German businesses expressed growing concern, especially in manufacturing.

In manufacturing the business climate index fell sharply. Manufacturers’ business expectations declined steeply, marking their largest downswing since November 2008. Assessments of the current business situation, by contrast, improved somewhat. This pattern of declining expectations and an improving current business situation emerged in several branches of manufacturing. With production levels falling at the end of last year, manufacturers fear that the downturn will continue.

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