The latest survey from the Ifo institute revealed that German business sentiment remained stagnant in May, falling short of expectations for improvement and indicating a sluggish recovery for the country's economy this year. The Ifo business climate index held steady at 89.3 in May, failing to meet analysts' forecasts of 90.4, according to a Reuters poll. Carsten Brzeski, global head of macro at ING, commented on the significance of the Ifo index, noting that it signals a lack of automatic rebound following the cyclical downturn. Brzeski elaborated on the prospects for the German economy, suggesting that momentum may pick up in the future, driven by robust wage growth supporting a tentative recovery in private consumption. Despite this optimism, he cautioned that the cyclical improvement does not imply an immediate return to pre-crisis conditions. The survey indicated that companies expressed reduced satisfaction with the current business situation, although expectations for the future brightened. While industries such as trade and construction are showing signs of recovery, service providers are experiencing setbacks. In the first quarter of 2024, the German economy expanded by 0.2%, as reported by the statistics office, confirming preliminary data. However, GDP had contracted in the final quarter of 2023. Klaus Wohlrabe, head of survey at Ifo, warned that the ongoing economic upswing remains fragile. Joerg Kraemer, chief economist at Commerzbank, suggested that the German economy is likely to stagnate in the second quarter before showing moderate growth later in the year. Kraemer attributed the subdued outlook in part to the government's failure to address longstanding issues eroding Germany's attractiveness as a business destination. Despite expectations for a downward trend in inflation, Wohlrabe noted an increase in the number of companies planning to raise prices in the next three months. The European Central Bank is anticipated to announce a rate cut for the euro zone, with subsequent moves contingent on progress in tackling inflation.