Ifo rises not only due to the fiscal package

Business expectations have risen significantly, ...

The Ifo business climate rose significantly in March – from 85.3 to 86.7, largely in line with expectations (consensus: 86.7; Commerzbank: 86.5). The assessment of the current business situation has mostly recovered from the decline in February (85.7 after 85.0). However, the significant increase in the business climate is mainly due to a much better assessment of business expectations (87.7 after 85.6).

As far as the major economic sectors are concerned, the business climate has improved in manufacturing in particular (-16.6 after -21.9). There was also a slight improvement in the services, trade and construction sectors.

... but not only because of the fiscal package

As the CDU/CSU and SPD had already agreed on massively increased funding for infrastructure and defense at the beginning of the month, this is likely to have influenced the responses of the companies surveyed. The significant rise in business expectations apparently reflects the hope of many companies that the future government's financial package will ultimately provide tailwinds for the economy. However, the Ifo increase is probably also due to a recovery in global manufacturing, which is benefiting from rate cuts by western central banks.

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