Business confidence in Germany rose for the third straight month in April, a major survey showed on Wednesday, raising hopes that a recovery is beginning for Europe's stagnant top economy.
The IFO Research Institute's reliability barometer, which is based on a survey of approximately 9,000 companies, rose from 87.9 points in March to 89.4 points.
The increase was slightly higher than expected by analysts surveyed by FactSet.
Business confidence rose in all sectors surveyed by Ifo, including manufacturing, services, trade and construction.
“Sentiment among German companies has improved,” Ifo Chairman Clemens Fuerst said in a statement.
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“The economy is stabilizing,” he added.
Germany's economy shrank by 0.3% last year as it faced expensive energy, high interest rates and weak demand from its main trading partners.
However, with improvements in industrial production and exports, there are increasing signs that a gradual recovery is beginning.
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Germany's Bundesbank said last week that the economy will avoid a recession and expand slightly in the first quarter of 2024, after previously expecting it to contract.
LBBW economist Jens Oliver Niklas said the latest IFO figures “seem to be reversing the trend”.
“We must continue to be cautious in these difficult times, but there is some evidence to suggest that the economy has at least bottomed out over the winter,” he said.
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He added that if the expected rate cuts from the European Central Bank “also provide a tailwind” in the coming months, Germany's economy “should see a slight increase in gross domestic product (GDP) this year.”
Germany's Economy Ministry is scheduled to release its latest growth forecast later on Wednesday.
MFP/SR/LTH