A closely-watched poll on Monday showed that German business confidence fell more than expected in January as companies grappled with coronavirus restrictions and uncertain prospects.
Ifo Institute’s monthly confidence index fell from 92.2 in December to 90.1 points. The managers ’assessment worsened the current situation and expectations for the next six months.
Economists had expected a drop to 91.4 points. “The second wave of the Coronavirus has halted the recovery of the German economy for the time being,” Ifo said.
Germany closed restaurants, bars, sports and entertainment venues on November 2 to curb the rise in coronavirus cases. This worked for some time, but did not reduce the number of cases.
Schools and non-essential businesses were closed on December 16, and restrictions were extended until February 14 last week. Although the number of cases is currently small, authorities are concerned about the potential impact of new virus variants such as the virus that was first detected in the UK.
The German economy, the largest in Europe, shrank 5% last year, ending a decade of growth. This was a lower drop than many had expected.
The Ifo Survey is based on the monthly responses of nearly 9,000 companies.