German companies unexpectedly became more pessimistic at the start of the year, adding to doubts before a snap general election taking place next month that the country can quickly return to growth.
An expectations index by the Ifo Institute for Economic Research fell to 84.2 this month from 84.4 the previous month.
Economists had predicted a minor uptick. A measure of current conditions improved, thanks in particular to a stronger current performance by services.
Photo: AFP
“Expectations deteriorated again,” Ifo president Clemens Fuest said yesterday in a statement. “Companies continue to be pessimistic.”
Germany just endured a second straight year of contraction, weighed down primarily by its struggling manufacturing sector.
Soft foreign demand and high borrowing costs have contributed to the weakness, but long-standing problems like the aging workforce and excessive dependence on China are increasingly coming to the fore.
They have become prominent topics of debate before the Feb. 23 federal election that would probably see German Chancellor Olaf Scholz ousted by Friedrich Merz, who leads the conservative CDU/CSU bloc.
Whether to revisit strict limits on public borrowing would be one of the first questions any new government would face.
“The top priority is to come up with an economic reform program that addresses some structural issues — energy prices, high taxes, regulation, bureaucracy,” Fuest said. “This is needed more than short-term stimulus.”
Business surveys by S&P Global showed the gloom in Europe’s biggest economy abating somewhat this month, with an index of private-sector activity climbing just above the threshold indicating expansion.
The Bundesbank and other forecasters still only expect muted growth this year, with US President Donald Trump’s threat to impose tariffs presenting a major risk to the outlook.
The European Central Bank is about to lend a helping hand, as it is widely expected to cut interest rates for the fourth straight time on Thursday.
Further reductions are anticipated this year, at least until borrowing costs stop hampering economic activity.
Semiconductor business between Taiwan and the US is a “win-win” model for both sides given the high level of complementarity, the government said yesterday responding to tariff threats from US President Donald Trump. Home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Taiwan is a key link in the global technology supply chain for companies such as Apple Inc and Nvidia Corp. Trump said on Monday he plans to impose tariffs on imported chips, pharmaceuticals and steel in an effort to get the producers to make them in the US. “Taiwan and the US semiconductor and other technology industries
SMALL AND EFFICIENT: The Chinese AI app’s initial success has spurred worries in the US that its tech giants’ massive AI spending needs re-evaluation, a market strategist said Chinese artificial intelligence (AI) start-up DeepSeek’s (深度求索) eponymous AI assistant rocketed to the top of Apple Inc’s iPhone download charts, stirring doubts in Silicon Valley about the strength of the US’ technological dominance. The app’s underlying AI model is widely seen as competitive with OpenAI and Meta Platforms Inc’s latest. Its claim that it cost much less to train and develop triggered share moves across Asia’s supply chain. Chinese tech firms linked to DeepSeek, such as Iflytek Co (科大訊飛), surged yesterday, while chipmaking tool makers like Advantest Corp slumped on the potential threat to demand for Nvidia Corp’s AI accelerators. US stock
The US Federal Reserve is expected to announce a pause in rate cuts on Wednesday, as policymakers look to continue tackling inflation under close and vocal scrutiny from US President Donald Trump. The Fed cut its key lending rate by a full percentage point in the final four months of last year and indicated it would move more cautiously going forward amid an uptick in inflation away from its long-term target of 2 percent. “I think they will do nothing, and I think they should do nothing,” Federal Reserve Bank of St Louis former president Jim Bullard said. “I think the
‘LASER-FOCUSED’: Trump pledged tariffs on specific sectors, including semiconductors, pharmaceuticals, steel, copper and aluminum, and perhaps even cars US President Donald Trump said he wants to enact across-the-board tariffs that are “much bigger” than 2.5 percent, the latest in a string of signals that he is preparing widespread levies to reshape US supply chains. “I have it in my mind what it’s going to be but I won’t be setting it yet, but it’ll be enough to protect our country,” Trump told reporters on Monday night. Asked about a report that incoming US Secretary of the Treasury Scott Bessent favored starting with a global rate of 2.5 percent, Trump said he did not think Bessent supported that and would not
RSS