Companies across Germany have revised upwards their investment plans for the current year. According to the Ifo Institute in Munich, investment expectations rose to +0.2 points in March, a significant improvement from -3.1 points registered in December 2025.
Timo Wollmershäuser, Ifo Economic Director, noted that improved business conditions in the industrial sector have brightened the mood. However, he cautioned that soaring energy costs due to the Iran conflict, coupled with increased corporate uncertainty, stand in contrast to a stronger economic recovery.
The most notable rebound in investment willingness was seen within the industry. Expectations climbed to +0.1 points in March, up sharply from -6.9 points in December. Particularly strong improvements were reported in non-energy-intensive sectors, where more companies plan to expand their investments this year. The net balance improved from -6.4 to +2.0 points. Specific sectors showing marked increases included mechanical engineering, which rose from -8.6 to +2.1 points, and vehicle manufacturing, which jumped from +2.9 to +14.8 points.
Conversely, investment sentiment remains subdued in energy-intensive sectors. The net balance for these areas was nearly unchanged in March at -9.0 points, matching the December level of -8.9 points. Investment expectations worsened in the chemical industry, dropping from -15.8 to -16.2 points.
Planned spending on research and development is also showing an uptrend. Both the automotive and machinery sectors, among others, anticipate increased investment, moving away from planned cuts in December. Overall, the corresponding net balance for the manufacturing industry improved from -4.1 to +1.2 points. Lara Zarges, Ifo Economic Expert, added that companies also intend to invest more across different industries, with the growing use of Artificial Intelligence expected to play a key role.
Retail remains the most pessimistic sector. The net balance of investment expectations was almost flat in March at -9.6 points, mirroring the December figures. In contrast, service providers confirmed their slightly positive outlook from December, with their investment expectations improving to +2.8 points from +1.1 points.