Ifo: Germany's Retail Sector Business Climate Index Dips Slightly

Foreks - The Ifo Institute reported that the business climate index for Germany's retail sector has slightly declined due to retailers assessing their current situations as somewhat worse compared to November, particularly in December when consumer spending typically peaks. Ifo also noted that business expectations for the upcoming months have slightly decreased.

Ifo expert Patrick Hoeppner stated that this year has been very challenging for the retail sector and that the overall economic environment is expected to remain difficult in 2025, saying, "Although many retailers anticipate an improvement in consumer sentiment." Ifo surveys indicated that while the business climate in the consumer goods sector is expected to improve in the first half of 2024, conditions are projected to worsen in the second half of the year.

Hoeppner added, "In addition to weakening demand, the shortage of skilled labor will continue to be a significant issue for many retailers in 2024." The outlook for 2025 is mixed. Ifo mentioned that increasing disposable income could provide a positive momentum, but uncertainties in economic policy continue to put pressure on both retailers and consumers.