FTechnicians work on the assembly line of German carmaker Volkswagen's electric ID. 3 car in Dresden, Germany, June 8, 2021. File Photo: REUTERS/Matthias Rietschel/File Photo
Germany’s business outlook brightened further as the recession many had feared after Russia attacked Ukraine looks increasingly likely to be avoided.
A gauge of expectations by the Ifo institute rose to 86.4 in January from 83.2 the previous month. That’s the fourth consecutive improvement and a bigger increase than economists had anticipated. A measure of current conditions slipped, however.
"The German economy is starting the new year with more confidence,” Ifo President Clemens Fuest said Wednesday in a statement.
The survey is the latest evidence signaling a better near-term outlook for the euro area’s largest economy. Natural gas prices have fallen from record levels amid mild winter weather and well-filled storages, raising hope that the hottest inflation in decades may ease sooner than previously anticipated.
The government in Berlin now sees gross domestic product growing 0.2% this year, rather than the 0.4% contraction predicted in October, according to people familiar with projections to be presented later Wednesday.
The Bundesbank has also said output more or less stagnated, rather than shrank, in the final three months of 2022. Fourth-quarter figures are due Jan. 31.
Surveys of purchasing managers by S&P Global also revealed that the service sector returned to expansion in January for the first time since June, while inflation pressure eased. Manufacturing, however, continued to endure falling demand.
