The mood among executives at German companies surprisingly soured somewhat in November. The Ifo business climate index fell to 88.1 points, after 88.4 points in October, as announced by the Munich Ifo Institute on Monday in its survey of around 9,000 managers.
However, economists polled by the Reuters news agency expected a small rise to 88.5 points. While companies are more optimistic about their situation, they are also more skeptical about their prospects than before. “It is doubtful that the German economy will recover quickly,” said Ifo President Clemens Fuest.
After shrinking in the spring and stagnating in the summer, the German economy is likely to grow slightly again in the final quarter of 2025, according to the Bundesbank.
However, experts only expect the economy to improve markedly next year, when additional government spending on infrastructure and defense is likely to provide a boost. However, US tariffs and a weakening competitive position in international competition slowed German industry.
This is what economists say about the Ifo index
The Ifo data makes it clear that firms still expect the German economy to stagnate, said chief economist Ulrich Kater of Dekabank. “Discussion of diverting investment funds for consumer spending in the federal budget is unlikely to be helpful.”
According to the assessment of chief economist Thomas Gitzel from VP Bank, there is almost no talk of economic optimism heading into 2026. The low level of the Ifo business climate in long-term comparisons suggests that the German economy is likely to grow only moderately in the coming year.
