On the downwards revision, Ifo cites subdued consumer sentiment and firms being reluctant to invest as the main reasons. That said, they do see better prospects for the economy for next year with a growth forecast of 0.8%. It’s important to note though that Ifo’s forecast was compiled on Thursday last week, just before the German government agreed to a debt deal; though it should already be considered here.
It will take some time for the spending effects to kick in. So, that explains the softer forecast with risks from US tariffs also set to weigh on the German industry.
