Ifo Institute: German Exporters See Business Outlook Significantly More Optimistic Again

Background of the Improvement

According to the institute's assessment, the improved sentiment is due, among other factors, to the effects of the interim tariff agreements between the EU and the United States, as well as progress in ceasefire negotiations in the Ukraine conflict. Both factors have recently reduced uncertainty for international trade.

Risks Remain

At the same time, the economists warn: Although sentiment has improved, a real upswing cannot yet be derived from it. Order books in many sectors remain thinly filled, and China remains a risk factor as an important sales market due to its economic weakness. The paper industry, which recently expected declining exports, is also benefiting little so far from the improvement in sentiment.

The Ifo survey is conducted monthly among around 2,300 companies. It is considered one of Germany's most important leading indicators for economic development in foreign trade.

The development comes at an inopportune time: According to preliminary data from the Federal Statistical Office, German exports in July rose by 0.6 percent month-on-month, adjusted for price, seasonal, and calendar effects; nominally, however, they still remained slightly below the level of the same month last year, according to Ifo.

Politics Responds to Economic Signals

Meanwhile, the federal government is preparing further economic policy decisions at its retreat in Mecklenburg-Western Pomerania. The recently improved export sentiment is also likely to be addressed there.

For the coming months, however, the Munich researchers expect a wait-and-see attitude from companies. Only when order intake from abroad rises reliably again will the improvement in sentiment also be reflected in actual export figures.