The mood in the German economy recovered significantly in June after the drastic slump in the first and beginning of the second quarter. The Ifo business climate rose by 6.5 points compared to the previous month to 86.2 points, said the Munich economic institute. This is the strongest increase ever measured, the economic researchers explained. Previously, the analysts had expected growth, but expected this to be somewhat weaker at 85.0 points on average.
It is the second consecutive surge in the key economic indicator after plummeting in March and April due to the Corona crisis. The companies rated their current situation somewhat better in June and were even more optimistic about the future and the further course of the year. "The German economy sees light at the end of the tunnel," said Ifo President Clemens Fuest.
The increase in the business climate index can be explained by the fact that the number of infections fell sharply at the time of the survey and the protective measures were largely relaxed. The stimulus package launched by the Federal Government, which aims above all to increase the buying mood of consumers, is also likely to be decisive for the rather optimistic expectations regarding the economic development. And so the managers surveyed by the Ifo assessed their business prospects and the situation of their company on average again significantly more favorably than last.
Ifo experts expect growth of seven percent
However, there are differences depending on the economic sector: In the manufacturing sector, which includes many industrial groups, the mood has recently been rather gloomy. There had been production downtimes due to broken supply chains. In the most recent survey, expectations about the further course of the year are particularly positive.
A similar picture emerged in the area of services, where many companies had recently viewed their business prospects as quite positive due to the easing. The prospects were also better in trade and construction - the latter sector had only a small decline anyway.
But the crisis is far from over, stressed economist Fuest. "A large majority of companies continue to rate the current situation as bad," Fuest emphasized. Especially with a view to the coming six months, one is less pessimistic.
Falling consumer spending and shrinking investments caused the German economy to collapse at the beginning of the year. Gross domestic product (GDP) fell by 2.2 percent from January to March, the largest since the financial and economic crisis of 2008/09. In the current second quarter, according to the economists' estimates, GDP is likely to drop by ten to eleven percent. From the third quarter onwards, most experts expect the economy to pick up noticeably and grow significantly.