Fall in German business activity fuels fears of economic downturn

According to S&P Global, Germany’s composite purchasing managers’ index (PMI) dropped to 49.7 in April, falling below the critical 50.0 threshold. The decline was seen in both the manufacturing and services sectors, with the latter hitting its lowest level in 14 months.

Cyrus de la Rubia of Hamburg Commercial Bank pointed out that the slowdown in services sector activity has been accompanied by a sharp decline in business optimism about future prospects. Concerns over global trade are weighing on investment decisions and consumer spending. However, the expert notes that despite these challenges, companies remain prepared to continue operating even under current conditions. Still, de la Rubia suggests additional stimulus measures may be needed to sustain economic resilience.

Meanwhile, the International Monetary Fund is warning of significant risks to Germany's economy and projecting stagnation this year. German authorities are set to release updated forecasts on Thursday, which are expected to show zero GDP growth for the third consecutive year.