Ifo shrugs off high oil prices

The ifo business climate index has risen surprisingly sharply (from 88.8 to 89.9), just like yesterday’s purchasing managers’ index.

Dr. Jörg Krämer

Commerzbank Economic Research

09/24/2026

Apparently, companies have shaken off the recent massive surge in energy prices. The German economy is more resilient than expected. However, we expect only a moderate recovery (1.2% for 2026). Due to the lack of far-reaching reforms, the battered competitiveness of Germany is not improving decisively, which is why companies will remain reluctant to invest domestically. In addition, exports are suffering from weak exports to China and from Trump’s tariffs.

The ifo business climate index rose unexpectedly sharply in September – from 88.8 to 89.9. The increase was above the consensus (consensus: 89.0. The improvement was driven both by the assessment of the current business situation (89.5 after 88.5) and by business expectations for the coming six months (90.4 after 89.0).

The recovery is remarkable because energy prices rose sharply in September due to the escalation of the Iran War. In the meantime, both the ifo business climate index and the PMI are higher than they were at the outbreak of the Iran War. This is another sign that the German economy – like most Western economies – is unexpectedly resilient with regard to the Iran War.

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