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The Ifo business climate index collapsed in March due to the Ukraine war

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The mood in German companies has collapsed in view of the Ukraine war: the business climate index fell to 90.8 points in March, after 98.5 points in February, as announced on Friday by the Ifo Institute of Munich. The reason for the low value was “a historical drop in expectations” of companies by 13.3 points, according to the Ifo. Even when the Corona crisis broke out, this decrease was not that great.

Around 9,000 companies respond to the Ifo Institute’s questions each month for the Business Climate Index. They are asked to assess their current business situation and their expectations for the next six months. However, the survey for the index in February took place before the crisis in Ukraine intensified. The data published on Friday now also shows the invasion of Russian troops in the neighboring country.

According to the institute, companies also evaluated their current situation as worse (minus 1.6 points). Regarding the expectations of the companies, the index fell from 98.4 to only 85.1 points. “Companies in Germany are expecting tough times,” Ifo President Clemens Fuest said.

In the manufacturing sector, the index fell more than ever. The Ifo explained that this also applies to the expectations of companies. In the services sector, the logistics industry in particular is “looking forward to the coming months with great concern”. There were also big drops in trade and construction.

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