Source: Sharecast
The business climate index ticked up to 86.7 from 85.3 in February.
The current situation index rose to 85.7 in March from 85.0 the month before, while the expectations index increased to 87.7 from 85.6.
The manufacturing index improved to -16.6 in March from -21.9 in February, while the service sector gauge rose to -1.1 from -4.3.
The index for trade came in at -23.7 this month versus -26.2 the month before, while the construction gauge improved to -24.6 from -27.4.
Ifo Institute president Clemens Fuest said: "Companies were more satisfied with their current business situation, and their expectations rose noticeably. German businesses are hoping for a recovery."
Franziska Palmas, senior Europe economist at Capital Economics, said: "The rise in the Ifo chimes with the increase in other activity and sentiment surveys for Germany in March: in particular, there have been big increases in surveys of manufacturing activity, which suggests that the worst of the manufacturing recession might be over. Forward-looking indicators have also generally risen more than indicators of current activity, probably reflecting optimism about the upcoming fiscal stimulus.
"However, sentiment could take a renewed downturn depending on how harshly Germany is hit by new US tariffs announced on 1st April. And most surveys, including the Ifo BCI, are still very low by past standards. The Composite PMI, which has the best relationship with GDP growth, is pointing to an expansion of just 0.1% q/q in Q1.
"This is in line with our forecast for the first quarter and our view that the German economy will only see a meaningful acceleration in the second half of this year after the new budget has been passed and is being implemented, which seems unlikely to happen before June."