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December 05
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Germany's economy is heading into recession, the Ifo Institute said, reporting a stronger-than-forecast drop in business sentiment across all sectors as Germany struggles to avoid gas shortages this winter.

The Ifo Institute said its business climate index fell to 84.3 from 88.6 in August, a bigger drop than economists' forecast of 87.0 according to a Reuters poll.

This was the lowest level since the COVID-19 pandemic began in May 2020.

The downturn was evident in all four sectors of the German economy, and pessimism increased significantly in the coming months. Ifo economist ‪Klaus Wohlrabe said they were seeing a fat minus on all fronts‬. Price expectations have risen again, and more than every other company has announced price increases.

German producer prices rose 7.9 percent in August from the previous month, with higher energy prices driving the trend.

The September Ifo survey points more than ever to a recession in the winter half of the year as the extremely high cost of energy imports makes Europe's largest economy poorer, Commerzbank economist Jorg Kramer said. The energy price shock is driving down consumer purchasing power and making production unprofitable for many companies, Kramer said.

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