Overview
- The Ifo business climate index rose to 89.0 from 88.6, the sixth consecutive increase and the highest reading since April 2024.
- Firms’ expectations improved while assessments of current conditions slipped, and Ifo president Clemens Fuest cautioned that the recovery remains weak.
- Manufacturing sentiment declined slightly and companies reported no revival in orders, with a reported EU–US tariff deal imposing about a 15% base burden on many exports.
- Expectations among makers of machinery and other investment goods strengthened, which Ifo and analysts link to federal investment incentives and accelerated depreciation measures.
- Germany’s economy was flat in the first half of 2025, with GDP up 0.3% in Q1 and down 0.3% in Q2, and recent projections suggest stagnation this quarter and roughly 0.2% growth for the year.