Dutch International: Germany's economic recovery optimism dampened by war

Carsten Brzeski of the Dutch international group stated in a report that the decline of the German Ifo business climate index indicates that the optimism of the business recovery has been swept away by the Middle East war. "Germany's most famous leading indicator has suffered severely from its highest level since last summer, as the Middle East war, soaring energy prices, and new uncertainties have weakened the previous optimism." The index dropped from 88.4 in March to 86.4. However, this conflict has changed a lot, but not everything. Brzeski said that the current situation cannot be compared to 2022, when a wave of inflation was fueled by rising energy prices and fiscal stimulus measures during the pandemic, leading to a wage-price spiral. He said that the driving factors of the German economic rebound, especially fiscal stimulus measures in defense and infrastructure, still exist.