German business confidence falls for third month in row, sparking recession fears

(MENAFN) German business confidence has continued its downward trajectory for the third consecutive month in August, casting a shadow over recovery prospects for Europe’s largest economy. According to the Ifo Institute, the business climate index fell to 86.6 in August, down from 87.0 in July, although this figure surpassed the 86.0 reading anticipated by analysts in a Reuters poll. Clemens Fuest, the head of the institute, expressed concern over the worsening economic outlook, stating that "the German economy is increasingly sliding into crisis."

The Ifo Institute's survey, which includes responses from approximately 9,000 managers, revealed that business confidence has further eroded, with companies assessing their current conditions more negatively. Klaus Wohlrabe, an economist at the institute, highlighted that the German economy appears to be entrenched in recession, driven by weak demand across various sectors and subdued investment levels. He also pointed out that consumer spending is hampered by inflation uncertainty, which is contributing to the overall economic malaise.

Looking ahead, Wohlrabe anticipates that the third quarter will experience a further decline in German GDP, following an unexpected contraction of 0.1 percent in the second quarter. The ongoing decline in business confidence and weak economic indicators underscore the challenges facing Germany as it struggles to navigate through a period of economic uncertainty and potential downturn. 

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