• KfW-ifo SME Barometer shows fourth consecutive rise
• Business situation has improved appreciably, outlook has brightened even more
• Business sentiment has improved among large enterprises as well
• Export expectations in particular have increased sharply

There was a surprising improvement in the mood among small and medium-sized enterprises in Germany in August. The business climate index rose for the fourth straight month, this time by a notable 4.5 points to -12.5 points. This positive development was driven by better assessments of the current situation and, even more strongly, by significantly more optimistic six-month business expectations. Although the sentiment barometer remains below the zero line, which marks the long-term average, the trend is pointing clearly upwards.

These are some of the findings of the KfW-ifo SME Barometer. Each month, it surveys more than 9,500 businesses from all relevant economic sectors on their current situation and expectations, broken down by enterprise size.

The business climate index for large enterprises improved by an even stronger 4.9 points over the index for SMEs. It now sits at -12.5 points, the same level as for SMEs.

The improvement in business sentiment among both SMEs and large enterprises was driven by manufacturing and wholesale. What is noteworthy is the enormous improvement in export expectations reported in the ifo survey, which are measured only in the manufacturing sector. The index for small and medium-sized manufacturing enterprises rose by 8.2 points to -1.7 points but took a giant leap of 21.4 points for large enterprises to now +8.6 points.

This sudden and very strong positive development is surprising. The ifo Institute has pointed out that German exports to the EU are booming and that there is particularly strong export optimism among manufacturers of data processing equipment as well as electronic and optical products. This is likely an indication that the global boom in AI technology has now taken hold in Germany as well and is becoming increasingly visible in the digitalisation sector, where order books are already well filled anyway.

The German economy has shown itself to be much more robust this year than assumed. Businesses have been able to navigate the impact of the Middle East conflicts and trade policy frictions much better than initially feared. Cautious optimism is returning to many businesses. They are taking a more positive view of their current situation and future business development than just a few months ago. The economy is moving in the right direction. We have raised our growth forecast for Germany to 1.1 per cent for this year and now expect growth of 1.5 per cent for 2027,

said Dr Dirk Schumacher, Chief Economist of KfW.

The current KfW-ifo SME Barometer can be found at: KfW-ifo SME Barometer | KfW

KfW supports SMEs with a number of promotional programmes on behalf of the Federal Government. More information is available at We are strengthening the SME sector (German page).