The business climate in Germany deteriorated more than expected in March following the Russian invasion of Ukraine, shows Friday the monthly survey of the institute of economic studies Ifo.
The business climate index fell to 90.8 from a (revised) 98.5 in February as economists and analysts polled by Archyde.com on average expected a figure of 94.2.
After two consecutive months of improvement, this index is starting to fall once more as the economic effects of the war on energy costs and supply chains give businesses a hard time.
The component of business leaders’ judgment of their current business conditions fell to 97.0 from 98.6, and that measuring changes in their expectations fell to 85.1 from 98.4.
Germany is not at risk of recession in the first quarter, said Ifo economist Klaus Wohlrabe, who warns that supply chain bottlenecks have increased for many manufacturers due to the war in Ukraine.
“The German economy is facing troubled and uncertain times (…) Two-thirds of industrial companies want to raise their prices, a proportion never seen before,” he said.
On Wednesday, the research institute revised down its German growth forecast for 2022 to between 2.2% and 3.1% from 3.7% previously, due to the war in Ukraine.
(Report René Wagner and Klaus Lauer, French version Laetitia Volga, edited by Jean-Michel Bélot)