German business sentiment deteriorated dramatically in March. The Ifo Institute’s business sentiment index drops from 96 points in February to 87.7 points in March. This is the biggest drop for the indicator since 1991 and brought it to its lowest level since August 2009. The expectations of the companies marked an unprecedented decrease from 93.2 points to 82 points in March. For the same reporting period, the assessments of the current situation have also deteriorated significantly, with the relevant indicator falling from 99 points to 93.8 points. This leads analysts to believe that the German economy is heading for a recession.

The Ifo study was conducted between March 2 and 18.

In the manufacturing sector, the business climate index dropped to its lowest level since August 2009. Never in the history of united Germany has the index recorded such a sharp decline, falling from -1.5 points to -17.2 points. Many companies announce plans to curtail production and lower their export estimates.

In the services sector, the business sentiment indicator has seen the largest decline since the institute began collecting this data in 2005. The index fell from 17.4 points in February to minus 2 points in March.

In trade, the sentiment measurer recorded a change from 1 point down in February to minus 20.4 points in March. In construction, the index collapsed from 13 points to 7.6 points.