German SMEs business climate improved in March, easing fears of an economic slowdown

Fears of a downturn in German economy seem to have faded for now. KfW-ifo SME Barometer showed that in March assessments of the current business situation improved by 2.0 points on February to 25.0 balance points.

The SME sector has regained some of its confidence with the increase of 1.7 points to 0.6 balance points which is strong enough to lift expectations slightly above the long-term average again. The trend in sentiment among large enterprises is similar to that in the SME sector. Situation assessments gained 2.0 points to reach 18.5 balance points.

Encouragingly, the growth in confidence in March was broad and not limited to specific segments. Improvements were seen across all sectors except construction, where the very good sentiment dropped slightly. The stabilisation of commodity prices has reduced their fear of a global downturn.

"After two increasingly worrisome months, the fears of a downturn have faded again. The upswing in Germany is likely to continue, mainly thanks to the vibrant domestic economy. Even if toxic risks remain, such as unexpected turbulence in the restructuring of the Chinese economy or fears about the EU drifting apart, I am still confident that the German economy will undergo sound growth of 1.7% in 2016." said Chief Economist of KfW Dr Jörg Zeuner