0950 GMT - Falling business sentiment suggests that the energy shock could upend hopes for a recovery in Germany, Franziska Palmas at Capital Economics says in a note. The Ifo business climate index fell to 86.4 in March from 88.4 in February. "The drop was entirely due to the expectations index, presumably reflecting concerns about the rise in energy prices and wider fallout from the war in the Middle East," Palmas says. But Germany looks more resilient compared with the energy shock of 2022. Price rises have so far been smaller, while a lot of energy-intensive production has been lost since then, Palmas says. "Germany also has more scope to loosen fiscal policy than most of its eurozone peers." Still, CapEcon downgrades its GDP forecast for 2026 to 0.5% from 0.8%. (don.forbes@wsj.com)
(END) Dow Jones Newswires
March 25, 2026 05:50 ET (09:50 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments