Business climate index fell to 88.5 in June from 91.5 in May
Both business expectations and current business conditions fell
Probability of longer recession rises

BERLIN, June 26 Reuters German business morale worsened for the second consecutive month in June, a survey showed on Monday, indicating that Europe39;s largest economy faces an uphill battle to shake off recession.

The Ifo institute said its business climate index fell to 88.5 this month from 91.5 in May. A Reuters poll of analysts had predicted a smaller drop to 90.7 in June.

Sentiment in the German economy has clouded over noticeably, Ifo39;s president Clemens Fuest said.

China39;s weaker than hoped for economic performance since its reopening from tight COVID19 lockdowns, a looming U.S. recession and ongoing monetary policy tightening seem to be weighing on German company sentiment, said Carsten Brzeski, global head of macro at ING.

What is clear is that the optimism at the start of the year seems to have given way to more of a sense of reality, Brzeski said.

Indeed, expectations were much more pessimistic, with the related Ifo index falling to 83.6 from May39;s 88.3. Companies also assessed their current situation more poorly, with that index falling to 93.7 from 94.8.

The economy faces the prospect of a longer recession as domestic demand and the expectations of exporters have both weakened, Klaus Wohlrabe, head of Ifo surveys, told Reuters in an interview on Monday.

The probability has…