Germany’s Business Confidence Posts Increase for 8th Straight Month
(MENAFN) Germany’s business confidence inched higher for the eighth straight month in August, signaling a cautious uptick in optimism among companies, according to a key survey released Monday. Yet economists warn the economic rebound remains precarious, challenged by external threats like U.S. tariffs.
The Munich-based ifo Institute reported the ifo Business Climate Index, derived from responses by roughly 9,000 firms, rose to 89 points from 88.6 in July. This gain was fueled by slightly improved future expectations, even as assessments of current business conditions deteriorated.
Sector sentiment weakened across manufacturing, services, trade, and construction. Manufacturing firms downgraded both their current situation and outlook, with no recovery visible in new industrial orders.
“The German economy’s recovery remains weak,” noted ifo President Clemens Fuest, pointing out firms’ growing pessimism about present conditions despite a modest lift in six-month outlooks.
Carsten Brzeski, global head of macro at ING Research, attributed the slight positive shift partly to Germany’s recent fiscal stimulus efforts. The draft 2026 budget, approved by the federal cabinet in late July, plans to increase spending to 520.5 billion euros ($608.9 billion), including a record 126.7 billion euros for investment—the highest for the second consecutive year—as Berlin aims to enhance infrastructure and bolster defense.
However, Brzeski cautioned that Germany’s growth trajectory remains highly vulnerable to outside influences such as trade policies and currency fluctuations, with ongoing U.S. tariffs weighing heavily on the export-reliant economy.
Adding to concerns, Germany’s Federal Statistical Office last week confirmed a sharper-than-expected GDP contraction of 0.3% in the second quarter, revising down the initial estimate of 0.1%. (1 euro = 1.17 U.S. dollars)
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