Persistent supply chain problems as well as more expensive inputs. These are the main causes of the further deterioration of the business climate in Germany. The value of its index is the worst since April this year.
The business climate index, published monthly by the German Research Ifo Institute, fell again in October. It reached 97.7 points, its worst result since April. It was last above 100 in July, and has been declining for the fourth month in a row since June. Business expectations, which are the worst since February this year, have also fallen significantly.
The Ifo Institute identified persistent supply chain problems as the main causes, with the supply of important inputs or components still staling. The automotive industry suffers from this, and not only in Germany. German firms are also worried about high input prices and rising energy prices.
The deteriorating situation of German businesses goes hand in hand with, among other things, the deteriorating outlook of the German central bank, which has adjusted its forecast for economic growth for this year “significantly downwards.” Meanwhile, the Deutsche Bundesbank expected Europe’s largest economy to grow by 3.7 percent this year.
