In September the mood in the German economy recorded its first – albeit timid – improvement since March with the ifo business climate index rising +0.3 points to 94.6. The slight uptick was attributable to a somewhat more positive assessment of the current business situation. However, companies’ business expectations for the coming six months suffered another setback. Moreover, the business climate in Germany’s important manufacturing industry recorded a further deterioration – albeit a more limited one compared to previous months. The ongoing decline in business expectations suggests that the risk of a recession will remain acute also in 2020. The combination of a subdued outlook for world trade and the German car industry as well as lingering elevated political uncertainty surrounding trade and Brexit appear too much to handle for the German economy, despite a still relatively resilient services sector. In 2019 as well as 2020, we expect the German economy to grow by only +0.6% and hence only about half as fast as the Eurozone as a whole.