German business confidence declined to a historic-low in April as there was a considerable deterioration in the assessment of current situation amid coronavirus, or COVID-19, pandemic, survey data from ifo Institute showed Friday.
The business confidence index fell to 74.3 in April from 85.9 in March. The score was forecast to fall to 80.0. The indicator declined drastically to the lowest value ever recorded.
The decline was primarily driven by the massive deterioration in the current situation. Companies have never been so pessimistic about the coming months, ifo President Clemens Fuest, said.
“The coronavirus crisis is striking the German economy with full fury,” Fuest added.
The current situation index slumped to 79.5 from 92.9 in March. The reading was also below economists’ forecast of 81.0.
At the same time, the expectations index dropped to 69.4 from 79.5 a month ago. The expected level was 75.0.
In manufacturing, the business climate index declined to its lowest level since March 2009. Industrial companies’ current business situation worsened dramatically and expectations fell to a historic low.
In the service sector, the business climate indicator fell to a record low. Service providers never reported such a poor assessment of their current situation. The pessimism of their expectations was also without precedent, the survey showed.
The Business Climate Index continued to nosedive in trade. Assessments of the current situation deteriorated sharply and expectations fell to a new record low.
In construction, the index has never sunk so abruptly, ifo said. The same is true for the indicator of the current situation and for expectations.
“It will take several more months and many data points before we will have a better grip on the full magnitude of the crisis, the permanent damage to the economy as well as the pace of the recovery,” Carsten Brzeski, an ING economist said.
The Bundesbank on Monday said the German economy plunged into a severe recession following the containment measures taken to contain the spread of coronavirus. Moreover, the bank said an immediate recovery is unlikely.
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