Berlin : Gloomy data fuels fears of German recession. Most companies' expectations for the next six months are increasingly pessimistic.

The mood among German businesses deteriorated more than expected in August, data showed, falling for the fourth month in a row and adding to fears that the economy may be heading for its second recession inside a year.

The Ifo institute said on Friday that its business climate index stood at 85.7, down from 87.4 in July. Analysts polled by Reuters had forecast an August reading of 86.7.

Assessments of the current situation fell to their lowest level since August 2020 and companies expectations for the next six months were also increasingly pessimistic.

'' The German economy is not out of the woods yet,'' Ifo President Clemens Fuest said.

Beset by high inflation and financing costs and a drop in exports that has hit the country's industrial sector hard, Germany's economy fell into recession last winter.

The economy posted zero growth in the second quarter compared to the previous three months, separate data from the statistics office showed on Friday.

Finance Minister Christian Linder said that, after a third consecutive quarter of contraction or stagnation, '' new economic impulses are more important than ever ''.

The Growth Opportunities Act, a programme of corporate tax relief worth billions of euros, would be a first step in that agenda, he said that on messaging platform X, formerly known as Twitter.

Germany's coalition government last week failed to agree on a framework for that programme.

German Economics Minister Robert Habeck agreed that the programme was an important step to attract investment.

'' The restrictive interest rate environment and the weak global economy, especially the development in China, make it difficult for us as an export nation,'' he said.

'' Targeted incentives for investment, both private and public, are important.''

The Ifo survey showed sentiment among German managers had become more pessimistic across all sectors in August. [Reuters]


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