German business ‘morale’ drops more than expected

BERLIN, Jan 25, (AP): German business confidence declined more than expected in January as businesses grappled with coronavirus restrictions and an uncertain outlook, a closely watched survey showed Monday.

The Ifo institute’s monthly confidence index fell to 90.1 points from 92.2 in December. Managers’ assessment of both the current situation and the outlook for the next sixth months worsened.

Economists had expected a decline to 91.4 points. The Ifo said that “the second wave of coronavirus has brought the recovery of the German economy to a halt for now.”

Germany shut restaurants, bars, sports and leisure facilities on Nov 2 in an effort to halt a sharp rise in coronavirus infections. That succeeded for a while, but didn’t bring case numbers down.

Schools and nonessential shops were closed on Dec 16, and the restrictions were extended last week until Feb 14. Although cases are now falling, authorities are worried about the potential impact of new virus variants such as the one first detected in Britain.

The German economy, Europe’s largest, shrank by 5% last year, ending a decade of growth. That was still a smaller drop than many had expected.

Ifo’s survey is based on monthly responses from about 9,000 companies.