German Business Sentiment Rises as Ifo Index Hits 86.7 in March

Improved outlook in manufacturing and services drives cautious optimism, though structural challenges and U.S. trade risks persist.

The Ifo Business Climate Index increased to 86.7 points in March 2025, up from 85.3 in February, reflecting improved sentiment across key sectors.
Manufacturing saw significant gains, with companies reporting a better current outlook and reduced pessimism about the future.
The services sector, particularly architecture and engineering firms, also showed improved confidence in both present conditions and future expectations.
A recently approved fiscal stimulus package, focusing on infrastructure and defense investments, has bolstered economic sentiment but its long-term effects remain uncertain.
Analysts predict minimal GDP growth of 0.2% for 2025, with potential U.S. tariffs under President Donald Trump posing a significant risk to Germany's export-driven economy.