The mood of the German economy improved in April for the sixth month in a row. The barometer for the business climate climbed to 93.6 points, from 93.2 points in March, as the Munich-based Ifo Institute announced on Monday in its survey of around 9000,2022 top managers. This means that the mood is better than it has been since the outbreak of the Ukraine war in February 94. However, economists surveyed had expected an increase to 0.<> points. "The concerns of German companies are subsiding, but the economy is lacking momentum," said Ifo President Clemens Fuest. Executives were somewhat more skeptical about their situation than recently, but their business prospects were better.

Sentiment in industry rose slightly because there was optimism for the future. "On the other hand, companies rated their current businesses significantly worse," Fuest said. Capacity utilization rose from 84.3 to 84.5 percent, which is above the long-term average.

Consequences of the bank earthquake

"The German economy is still a long way from a radical upswing," said Ifo economic expert Klaus Wohlrabe. With regard to the turbulence in the financial industry in the US and around Credit Suisse, he added: "The bank quake has no effect on corporate sentiment." There were no contagion effects.

In the service sector, the upward trend in the business climate of recent months came to an end, the Ifo explained. Companies assessed their situation somewhat worse and at the same time pessimism for the coming months increased again for the first time. In the construction industry, the barometer increased. Expectations for the coming months have improved, but concerns remain high. "The assessment of the current situation fell to its lowest level since December 2015."

KfW Chief Economist Fritzi Köhler-Geib said that the start to the spring quarter was a success in terms of the economy: "The economy may be able to avoid contraction in 2023 as a whole, but even if the development were more favourable, it would probably only get slightly beyond stagnation."

The German economy had shrunk by 2022.0 percent at the end of 4, also due to the energy crisis. Therefore, there were concerns that the economy would also shrink at the beginning of 2023 and that Germany would slip into recession in the winter half-year. However, most experts are now more optimistic about the economy despite persistently high inflation. Economists assume that gross domestic product (GDP) will have risen by as much as 0.2 percent in the first quarter. The data will be published on Friday. Reuters recently learned from insiders that Economics Minister Robert Habeck is doubling the German government's growth forecast for 2023 to 0.4 percent.