German Business Sentiment Inches Higher Despite Tariff Turbulence

By Ed Frankl

Business sentiment in Germany unexpectedly edged up in April, likely an endorsement from firms of government policies to boost spending on defense and investments, despite the market turmoil prompted by U.S. President Trump's tariff barriers on Europe.

The Ifo Institute said Thursday that its business-climate index climbed to 86.9 in April from 86.7 in March, better than the 85.1 expected by economists surveyed by The Wall Street Journal.

"Companies were more positive about their current situation. However, expectations were gloomier," Ifo President Clemens Fuest said.

More than 80% of German companies expect Trump's policies to negatively hit the economy, according to a separate poll published this week by the ZEW Mannheim economics research institute.

"Uncertainty among the companies has increased. The German economy is preparing for turbulence," Fuest added.

Germany's economy contracted in the past two years and the outlook remains poor, with the International Monetary Fund this week downgrading economic expectations to zero growth for 2025 from 0.3% previously.

Write to Ed Frankl at edward.frankl@wsj.com