Deutsche Bank economist Marc Schattenberg notes that the ifo Business Climate Index deteriorated in March as German businesses turned more pessimistic on expectations, while their assessment of current conditions was unchanged. He highlights risks from the Middle East conflict for global supply chains and petrochemicals, and now expects the anticipated recovery of the German economy in 2026 to be significantly delayed.

Business sentiment weakens and recovery delayed

"Unsurprisingly, the ifo Business Climate Index deteriorated noticeably in March."

"Business expectations were significantly more pessimistic than in the previous month, given the energy price shock and increased perceptions of uncertainty."

"However, the assessment of the current situation remained unchanged."

"Depending on the duration of the conflict in the Middle East, the impact on global supply chains, particularly for petrochemical products, could become even more apparent in the coming weeks."

"The recovery of the German economy that we expected for 2026 is now likely to be significantly delayed."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)