Germany’s Ifo business climate index likely recovered slightly in March

Germany’s Ifo business climate index for March is likely to rise somewhat to 105.8 from February’s 105.7. The index continues to be at a historically high level; however, expectations have been hit considerably in recent months as uncertainty in market increased. It is possible that most of the downbeat is exaggerated. Germany’s industrial production was considerably more than market expectations at the beginning of 2016.

Hence, expectations are likely to rebound from 98.8 to 99.7, whereas the assessment of current conditions might slightly decline to 112.5, remaining at a high historical value. The wider than expected actions by the ECB and the recent stabilization in the market are expected to have had a positive influence. Risks to the GDP forecasts are on the upside given the strong start to Q1 in terms of hard data.