Survey Results

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.

The ifo Business Climate Index Eastern Germany rose considerably in March. The barometer of business sentiment for the regional economy in eastern Germany climbed to 90.0 points, up from 88.6 points in February. The eastern German companies surveyed provided assessments of their business situation that were somewhat better than the previous month, and they also raised their business expectations slightly.

Not only did March bring a gradual rise in outdoor temperatures, but it also warmed up the business climate in Saxony. The barometer of business sentiment in Saxony’s economy rose from 90.2 to 91.6 points. The companies surveyed raised their assessments of the business situation significantly and their business expectations slightly compared to February.

Sentiment in the German export industry is markedly brighter. The ifo Export Expectations rose to -1.4 points in March, up from -7.0 points in February. “World trade ought to pick up in the months ahead,” says Klaus Wohlrabe, Head of Surveys at ifo, “and German exporters hope to benefit from this.”

Companies in Germany are again looking to hire more staff. The ifo Employment Barometer rose to 96.3 points in March, up from 94.9 points in February. “Companies are currently more willing to hire because they are better able to assess the economic conditions. Skilled workers continue to be in demand,” says Klaus Wohlrabe, Head of Surveys at ifo.

Uncertainty among the self-employed in Germany has increased. As a result, the business climate for this segment has deteriorated, according to the latest ifo survey in March (“Jimdo-ifo Business Climate Index for the Self-Employed”). The index fell to -15.6 points*, down from -14.6 points* in February. “Contrary to the situation in the other sectors of the economy, the self-employed are experiencing increasing doubt,” says ifo expert Katrin Demmelhuber.

Companies in Germany have revised their investment plans for the current year downward. The ifo investment expectations fell to -0.1 points in March, down from +1.2 points in November. “Global demand for capital goods and intermediate goods remains weak and uncertainties persist regarding economic policy. As a result, many companies are postponing their investment decisions,” says Lara Zarges, economic expert at the ifo Institute.

On November 15, 2023, the Second Senate of Germany’s Federal Constitutional Court declared the second supplementary budget for 2021 unconstitutional. The reasons given included a violation of the debt brake enshrined in the country’s Basic Law (Art. 109 and Art. 115). As a result, the regular budget and parts of the special funds for 2023 and 2024 will have to be significantly restructured. The 45th ifo and FAZ Economists Panel is dedicated to the consequences of the ruling and focuses on the debt brake, which was at the center of discussions following the ruling. The survey, in which 187 economics professors took part, was conducted from November 28 to December 5, 2023.

How are economists’ expectations for future price developments evolving worldwide? Can we observe a decline in inflation expectations? The latest wave of the Economic Expert Survey (EES) by the ifo Institute and the Institute for Swiss Economic Policy examines economists’ inflation expectations at a global level. The result: although inflation expectations worldwide remain well above central banks’ inflation target, there is a further decline in the expected inflation rate for 2024 compared to previous quarters. However, long-term inflation expectations show a stagnating or rising trend.

What does HR planning look like in companies? This question was the focus of the Randstad-ifo Personnel Manager Survey in the fourth quarter of 2023. The answer is difficult: in addition to the current gloomy economic outlook, a number of other economic and political issues are currently posing a considerable challenge for companies, not least the shortage of applicants and skilled workers, which companies are increasingly feeling and which is having the greatest impact on HR strategy.

How do the Germans grade the schools in their federal state? Where do they see serious problems in the school system? And what solutions do they prefer - for example, for teacher shortage? The ifo Education Survey 2023 examines these and other questions.