Germany’s business climate improved slightly in April as Europe’s largest economy absorbed the initial shock of war in Ukraine, an economic think tank said on Monday.
“The German economy has shown its resilience,” Ifo President Clemens Fuest said after the closely watched index rose to 91.8 points from 90.8 points in March.
Businesses were less pessimistic about the outlook for the economy, after the mood plummeted in March following the Russian invasion of Ukraine, Ifo said.
The headline indicator fell nearly eight points in March as forecasts took a bigger hit than at the start of the coronavirus pandemic two years ago.
The assessment of current conditions was “minimally better,” Fuest said, adding that business sentiment had “stabilized at a low level.”
“The initial shock of the war seems to have subsided somewhat, but given the multitude of risks, it’s too early to start talking about a turning point,” said LBBW bank analyst Elmar Voelker.
The continuing impact of the conflict in Ukraine was “difficult to estimate,” including the possibility of Russian gas supplies being cut off, Voelker said.
Germany, like many European countries, is heavily dependent on natural gas supplies from Russia to meet its energy needs.
In the chemicals sector, where the impact of tap closures could be significant and lead to production stoppages, expectations have deteriorated, according to the Ifo survey.
Confidence in the construction sector also dipped bucking the overall trend to its lowest level since May 2010, as the sector grappled with ongoing supply disruptions.