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Sentiment in German companies has improved noticeably. The ifo Business Climate Index rose to 87.8 points in March, up from 85.7 points in February. In particular, companies’ expectations turned much less pessimistic. Assessments of the current business situation also improved. The German economy glimpses light on the horizon.

Sentiment among companies and households is poor and uncertainty is high. Price-adjusted gross domestic product will increase by only 0.2 percent this year compared to the previous year. Next year, economic output will then increase by 1.5 percent. This means that the growth forecast for the current year has been significantly lowered (by 0.7 percentage points) compared to the ifo Economic Forecast Winter 2023 and slightly raised (by 0.2 percentage points) for 2025. Contrary to expectations, the German economy is in recession in the winter half-year 2023/24. In particular, a recovery in industrial activity will not set in until later

ifoCAST generates forecasts of current German GDP with the help of a statistical model that works with historical correlations. These forecasts do not necessarily have to correspond to the published ifo Economic Forecasts, which also take expert knowledge into account.