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The
Ifo institute said its business climate index jumped to 93.3
from a reading of 91.1 in February. A Reuters poll of analysts
had pointed to a March reading of 91.0.
The improvement in business morale for the fifth month in a row
was driven primarily by business expectations, which rose to
91.2 in March from a revised 88.4 the month before, its highest
level in at least a year, according to Ifo.
The managers at 9,000 companies surveyed by Ifo had not changed
their positive sentiment, despite the banking sector turmoil,
likely because no German bank has so far been affected, Ifo head
of surveys Klaus Wohlrabe told Reuters.
"Despite the turbulence in the financial markets, the German
economy is starting spring with a good feeling," he said.
The German government has said the economic situation should
improve from spring onwards, and in January revised up its
economic forecast for 2023, predicting growth of 0.2%.
Analysts welcomed the unexpected increase but warned against
being too optimistic about what it means for the months ahead.
"All in all, the business climate is not yet based on anything
more than hope," said economist Alexander Krueger at private
bank Hauck Aufhaeuser Lampe, adding: "It still doesn't look like
a real upswing for 2023."
The European Central Bank's interest rate hikes since last July
are taking effect with a time lag of at least four quarters,
which argues against economic recovery in the second half, said
Commerzbank chief economist Joerg Kraemer.
Despite calls by some investors to hold back on policy
tightening until turmoil in the banking sector eases, the ECB
raised its refinancing rate by 50 basis points to 3.50% this
month, leaving the door open to future hikes as it forecast
inflation would remain above its 2% target through 2025.
(Reporting by Miranda Murray and Rene Wagner, Editing by
Friederike Heine)
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