"German companies are hoping for a recovery," notes Ifo chief Clemens Fuest in a comment.
He adds that the index shows that German companies are more satisfied with the current situation than before and simultaneously have a much brighter outlook on the future.
"It's a big change"
The same type of signal about brighter times in the German economy – which has contracted for two years in a row – came as recently as Monday. Then, a preliminary purchasing managers' index for the German economy in March was presented, which turned upwards to the highest level in ten months.
This follows last week's Zew index, which showed how the mood among German analysts has risen to the highest level since early 2022.
The turnaround in the German mood comes since Germany's parliament last week passed a decision to exempt massive investments in defense and infrastructure from the constitutionally mandated German so-called debt brake – which puts an end to decades of relatively tight German fiscal policy.
It's a big change, says Fuest to Bloomberg TV.
Especially the manufacturing industry
It is especially the manufacturing industry – an important customer base for Swedish export companies – that has a brighter outlook on the future, according to Ifo's index. This is connected to the fact that the large public investments that are now imminent will drive up order intake going forward.
But other sectors – such as services, trade, and the construction sector – have also been positively affected, according to Ifo's measurement.
Ifo's main index for March rose to 86.7, up from 85.3 in February. The increase was in line with market expectations. As for the sub-index for future confidence, it rose to 87.7, from 85.6 in February. There, expectations were for an increase to 87.3.
