Business uncertainty for companies in Germany has noticeably climbed in recent weeks. According to the latest Ifo Economic Climate Survey, as of March, a considerable 78.6 percent of companies found it difficult or quite difficult to assess their future business prospects, up from 75.4 percent in February. This indicator of economic uncertainty now marks its highest reading since February 2024. Klaus Wohlrabe, who leads the Ifo surveys, commented that “the war in Iran has noticeably increased the uncertainty within the German economy” adding that the consequences for many businesses are currently hard to calculate. The industrial sector is showing particularly high levels of uncertainty, with 87.7 percent of companies affected. This figure has remained above 80 percent since October 2021, reflecting the sector’s continuing structural challenges. Uncertainty is especially pronounced within energy-intensive industries; for example, it stands at around 95 percent in the chemical industry and 93.9 percent among manufacturers of rubber and plastics. Sectors providing services also experienced a notable increase in uncertainty, rising from 66.6 percent to 72.0 percent. Transport and logistics were particularly affected, with 88.1 percent of companies reporting planning difficulties, an increase from 82.7 percent in February. Uncertainty in the retail trade remains high at 84.4 percent (up slightly from 84.1 percent), while the construction industry reports a level of 73.4 percent, slightly higher than the previous month’s 71.9 percent. Wohlrabe concluded by noting that businesses are currently facing a multitude of risks, ranging from rising energy prices to potential supply chain disruptions. He added that the longer this uncertainty persists, the more pressure will build on investment and growth.
Israel Conflict Heightens Uncertainty for German Businesses
