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Surprise rise in German business morale in April despite Ukraine war
Global Banking & Finance Review®
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BERLIN (Reuters) – German business morale unexpectedly rose slightly in April as companies were less pessimistic after the economy appeared resilient following the initial shock of the war in Ukraine, a survey showed on Monday.
The Ifo institute said its business climate index rose slightly to 91.8 in April from 90.8 in March. A Reuters poll of analysts had pointed to an April reading of 89.1.
Economists said the Ifo survey’s slight rise by no means indicated a turn towards optimism in the coming months.
“The general climate is no different than a month ago due to the war in Ukraine. Companies are still in a bad mood, especially when looking ahead,” said Alexander Krueger, chief economist at bank Hauck Aufhaeuser Lampe.
Joerg Kraemer, chief economist at Commerzbank, said the war in Ukraine and a possible embargo on energy imports from Russia remained big concerns for companies.
The German government is expected to cut its growth forecast for Europe’s biggest economy for 2022 to 2.2% from 3.6% due to the impact of the war, a government source told Reuters last week.
The government is due to present its updated economic forecasts on Wednesday.
Germany’s Bundesbank warned last week that the German economy would contract by nearly 2% this year if the war in Ukraine escalated, resulting in a boycott of Russian energy, weaker external demand and greater uncertainty.
(Reporting by Miranda Murray, Thomas Escritt, Klaus Lauer, Rene Wagner and Rachel More; editing by Maria Sheahan)
The Ifo Business Climate Index is a key indicator of business sentiment in Germany, reflecting the current and future economic conditions based on surveys of business leaders.
Economic growth refers to an increase in the production of goods and services in an economy over time, often measured by GDP.
Business investment involves the purchase of goods and services by businesses to enhance their productive capacity, which can lead to economic growth.
A financial crisis is a situation where the value of financial institutions or assets drops significantly, leading to widespread economic instability.
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