BERLIN, Jan 25 (Reuters) – German business morale improved in January as Europe’s largest economy started the new year with slower inflation and an improved outlook, a survey showed on Wednesday.
The Ifo institute said its business climate index rose to 90.2 from 88.6 in December, in line with a Reuters poll of analysts.
“The German economy started the new year with more confidence,” said Ifo President Clemens Fuest.
Ifo said the increase was due to a significant reduction in pessimistic expectations, while companies were less satisfied with current conditions.
“There may not be a recession, but GDP may contract slightly in the first quarter,” said Ifo economist Klaus Wollrabe.
The Ifo growth is in line with optimistic signals from other economic indicators, such as German consumer confidence consolidating its upward trend in February, or Germany’s flash composite PMI rising for a third straight month in January.
“The Ifo business climate recovered significantly for the third time in a row, as easing in gas markets further dampened business fears of a deep recession,” said Joerg Kraemer, chief economist at Commerzbank. level of decline.
“A mild recession is still the more likely scenario,” he said.
The German government will release revised economic forecasts later on Wednesday. The government now expects price-adjusted growth of 0.2 percent this year, much more optimistic than the 0.4 percent contraction forecast in the fall, according to a draft report seen by Reuters.
Reporting by Miranda Murray, Rachel More, Rene Wagner and Klaus Lauer.Written by Maria Martinez, Edited by Kirsti Knolle and Tomasz Janowski
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