- Klaus Wohlrabe, Ifo
In March, the German Business Climate Index rose more than many experts estimated. It surged to 112.3, appearing to be the highest since June 2011. Such notable change suggests that German businesses have finally adapted to the new US Administration and are not disturbed by the US President Donald Trump's plan to levy a 35% border tax on German car manufacturers or his $375 billion bill for NATO handed to the German Chancellor Angela Merkel. The positive rise of business confidence also shows that companies calmly perceive the upcoming elections in France and Germany and the already conducted elections in Netherlands. Altogether, this allows to assume that the German economy is relatively indifferent to the current political turbulences across the world. Nevertheless, the reason for such unexpected surge was also based on economic grounds. In particular, improvements in the manufacturing, construction and retailing sectors that were fuelled by higher demand for cars and machinery. Moreover, with respect to the construction industry, sentiment in the following sector reached the highest level in 26 years amid positive demographics, spiking wages and lower borrowing costs, which altogether created a housing boom.
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