Development of the ifo Business Climate Index in Germany 2020-2022

In December 2022, the ifo Business Climate Index fell to 88.6 points, up from 86.4 points in November of the same year. During the specified time period, figures were lowest in April 2020, which was at the start of the coronavirus (COVID-19) pandemic in the country. There was also another dip in September 2022, when the energy crisis and the inflation were at their peak.

What is the ifo Business Climate?

The ifo Business Climate is an indicator for economic activity in Germany. It is based on approximately 9,000 monthly responses from businesses in manufacturing, the service sector, trade, and construction. Companies are asked to give their assessments of the current business situation and their expectations for the next six months. They can describe their situation as “good,” “satisfactory,” or “poor” and their business expectations for the next six months as “more favorable,” “unchanged,” or “less favorable.” The balance value of the current business situation is the difference in the percentage shares of the responses “good” and “poor”; the balance value of expectations is the difference in the percentage shares of the responses “more favorable” and “less favorable.” The business climate is a transformed mean of the balances of the business situation and the expectations. To calculate the index values, the transformed balances are all normalized to the average for the year 2015.