Economy: Ifo index falls – Iran war slows down economy

The companies surveyed by the Ifo Institute assessed their current business and future expectations worse. “Hopes for an upswing are gone for the time being,” said Ifo President Clemens Fuest, commenting on the results of the monthly survey of 9,000 companies.

“The collapse in the Ifo business climate clearly shows how badly the energy price shock is hitting the German economy,” said Commerzbank chief economist Jörg Krämer. Growth is expected to be a significant 0.4 percentage points lower this year even if the Strait of Hormuz reopens at the end of May after a total of three months. “For this scenario, we only expect growth of 0.6 percent. Adjusted for the unusually high number of working days, this corresponds to a meager increase of 0.3 percent. But every additional day without oil deliveries through the Strait of Hormuz increases the risk of recession.”