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German Ifo index rebounding

April 24, 2014

The business climate in Germany has rebounded after a drop in March caused by the Ukraine crisis. The rise in April has surprised analysts who expected another hit amid ongoing talk of sanctions against Russia.

https://p.dw.com/p/1Bno9
Hans-Werner Sinn
Image: dapd

Ifo's Business Climate Index rose to 111.2 points in April, up from a reading of 110.7 points in March, German market research group Ifo said Thursday.

In April, the moods among German business leaders had overcome a brief dent in the previous month and had resumed monthly gains since October 2013.

“Despite the crisis in Ukraine the positive mood continues,” said Ifo President Hans-Werner Sinn in a statement.

The Economic Consequences of the Crimea Crisis

In March, Russia's annexation of Crimea caused concerns among German businesses because of the country's strong trade ties with Moscow. Fears were mounting that a set of limited sanctions imposed by the United States and Europe might escalate, hitting German exports as well as its imports of gas and oil from Russia. Analysts were surprised by the gain in the index this month because they had predicted a decline to 110.4 points due to the prevailing crisis in Ukraine.

Ifo President Hans-Werner Sinn said, however, that companies were again looking more confident towards future business developments. Ifo's sub-index of business outlook in the manufacturing industry, for example, rose to its highest level since 2011.

Ifo' Business Climate Index is compiled from responses of about 7,000 German companies and measures assessments of their current business situations as well as of future developments. Along with brighter prospects for the next six months, current business also improved in April, although on a less significant scale.

uhe/hc (dpa, AP, Reuters)