Business Sentiment in Germany Turns Negative as 2023 Comes to a Close

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German business morale declined in December, as concerns about the economy deepened due to a year-end budget crisis. The Ifo institute’s confidence barometer, based on a survey of around 9,000 companies, fell to 86.4 points in December, disappointing analysts who had expected an increase. This dip comes as the German government had to rethink its 2024 budget after a recent court ruling. The country’s export-driven economy has faced challenges such as high inflation, rising interest rates, a manufacturing slowdown, and global economic weakness. Economic institutes expect the German economy to contract slightly this year before experiencing a modest recovery. However, the Bundesbank has sharply cut its forecast for next year, now expecting output to be 0.4 percent in 2024.

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