German Ifo business climate index falls again in June, economic growth to stay subdued until end-2018

German Ifo business climate dropped again in June after having stagnated in May. The Ifo business climate for Germany dropped to 101.8 points in June from 102.3, as compared with consensus expectations of 101.8. While businesses see their current situation more negatively than in May, dropping to 105.1. Their expectations for the coming six months remained unchanged at 98.6. The German Ifo business climate dropped in manufacturing as well as in the service sector, unlike the German purchasing managers’ index.

The trend – as gauged by the seven-month average – still points down, noted Commerzbank. The weaker economic growth in the first quarter was no outlier than can be excused by referring to bad weather or the flu wave.

In the past, intermediate downswings lasted about one year on average. This would signify that the German economic growth would continue to be subdued until the end of 2018. Downside risks continue to be there for 2018 growth forecast of 2 percent, stated Commerzbank.

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