The morale of the German business world has improved.

The approval of a reform allocating 500 billion euros for defense and infrastructure spending has heightened business sentiment in Germany this month. The Ifo Institute's business climate index rose from 85.3 in February to 86.7 in March, surpassing economists' expectations of 86.6. This March figure marks the highest level observed since July of the previous year.

Ifo President Clemens Fuest noted, "German companies are hopeful for a recovery. Businesses are more satisfied with their current situation, and their expectations have visibly improved." Particularly, the indicator for manufacturing has significantly increased, reflecting firms' optimism about a rise in defense and infrastructure orders. Additionally, indicators for the services, trade, and construction sectors have also shown improvement. The March Ifo survey data follows a strong increase in Germany's ZEW survey, which revealed the most positive sentiment among financial analysts since the beginning of 2022.