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Business confidence in Germany drops to 6-month low

Business confidence in Germany drops to 6-month low

Confidence in German companies fell to its lowest level in six months during January, in light of the worsening impact of the second coronavirus wave, which halted the recovery of growth in the largest economy in Europe.

Ifo business climate index for January came at 90.1 from a previous reading of 92.2, and expectations were at 91.5. The Ifo current conditions index declined to 89.2 from the previous reading of 91.3 and expectations of 90.

As for the expectations gauge, it slipped to 91.1 this month, while expectations were at 93.2, compared to a prior of 93.

The unprecedented government bailout and stimulus measures helped reduce the shock of the pandemic in Germany last year, when the economy contracted by 5.0%, less than expected and contracted less than it was during the global financial crisis.

The German government has agreed to extend the lockdowns of the economy until mid-February, in light of Germany's continued fight against the second Covid-19 wave.

The manufacturing sector in Germany may not be able to prevent the economy from falling into recession during the first quarter of 2021 due to the significant decline in the services sector and the expected decline in global demand.

The euro fell against the dollar during today's trading, as the pair reached its lowest level today at 1.2139, after it opened the day's trading at 1.2168. 

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