German companies have adjusted their investment plans upward for the current year. Investment expectations, as measured by the Munich Ifo Institute, rose to +0.2 points in March, a significant rebound from -3.1 points reported in December 2025.
According to Ifo Chief Economist Timo Wollmershäuser, the improving business climate in the industrial sector has somewhat lifted sentiment. However, he noted that soaring energy costs, spurred by the situation in Iran, and increased uncertainty among businesses are counteracting a more robust economic recovery.
The most pronounced increase in willingness to invest was seen in the industry as a whole. Expectations rose to +0.1 points in March, up from -6.9 points in December. Sectors that are not heavily dependent on energy showed particularly strong improvements; here, many more companies plan to expand their investments this year, with the balance shifting from -6.4 to +2.0 points. Notable gains were observed in mechanical engineering (from -8.6 to +2.1 points) and vehicle manufacturing (jumping from +2.9 to +14.8 points).
Conversely, the willingness to invest in energy-intensive industries remains restrained. The balance for March was nearly unchanged at -9.0 points, reflecting the December level of -8.9 points. Furthermore, investment expectations actually deteriorated in the chemical sector, moving from -15.8 to -16.2 points.
Plans for industry spending on research and development are also showing positive momentum. Both the vehicle and mechanical sectors, among others, now anticipate increased investment, whereas cuts were projected in December. Overall, the balance for manufacturing goods saw a positive change, moving from -4.1 to +1.2 points. Ifo economic expert Lara Zarges added that companies across various sectors are eager to invest more in software, with the increasing adoption of Artificial Intelligence expected to play a key role in this trend.
Retail remains the most pessimistic segment. The investment expectation balance for March stood at -9.6 points, mirroring the nearly unchanged negative tone from December. In contrast, service providers confirmed their slightly positive outlook from December, with their investment expectations improving from +1.1 to +2.8 points.
