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“The January Ifo index shows a worsening of both the current assessment and the expectations component and signals a very weak start to the new year for the German economy,” Carsten Brzeski, Global Head of Macro at ING Bank noted while offering his take on the business survey.

Key quotes

“The Ifo index dropped to 90.1, from 92.1 in December, and stands at its lowest level since June. The monthly drop was the worst since April. Both the current assessment and the expectations component worsened significantly, with expectations now back at their June levels after several disappointing months.”

“Today’s Ifo index shows the full impact of the stricter lockdown measures put in place in mid-December, signaling a very weak start to the new year for the German economy.”

“We will only know for sure on Friday, but there is compelling evidence that the German economy avoided a double-dip in the fourth quarter.”

“Looking ahead, however, the stricter lockdown since mid-December will clearly leave its mark on the German economy in the first quarter.” 

“With the current lockdown measures in place until mid-February and no significant easing in the offing immediately afterward, the short-term outlook for the German economy is anything but rosy.”

Read: EUR/USD drops towards 1.2150 as German IFO Business Climate Index misses estimates with 90.1 in Jan