Germany ends year on pessimistic note as ifo index declines

Firms are increasingly pessimistic about the first half of 2026, even as their assessment of the current situation remained broadly unchanged. Overall, the year is ending without any meaningful sense of optimism across the economy.

The downturn was particularly evident in manufacturing, where the business climate index declined across almost all sectors. The fall was mainly driven by more negative expectations for the months ahead, ifo said in a release. 

While assessments of the current business situation improved slightly, they remained at a weak level. Manufacturers also reported a decline in new orders and indicated plans to scale back production.

Conditions also worsened in trade, where the index fell as companies revised down their assessment of the current situation. Expectations for the first half of next year remain gloomy, pointing to subdued demand and limited recovery momentum. Retailers, in particular, expressed dissatisfaction with Christmas sales.

ALCHEMPro News Desk (HU)