Nonetheless, the collapse in sentiment currently seems more pronounced than the actual deterioration in the situation. While the business climate in industry, according to the Ifo test, has literally plummeted in recent months, new orders have merely stagnated.
“A slump in sentiment can herald a recession, but does not have to. However, it is irrefutable that economic growth inGermany has slowed down considerably. In the first half of this year GDP grew by around 1½ percent at an annual rate, in the second half the figure will be 1 percent at best,” said Michael Heise, chief economist at Allianz.