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ECONOMY

German business mood up slightly despite Ukraine war

The business climate in Germany improved slightly in April as Europe's largest economy absorbed the initial shock of the war in Ukraine, an economic think-tank said on Monday.

A construction site in Berlin Germany
A construction site in Berlin, Germany. Photo: picture alliance/dpa | Carsten Koall

“The German economy has shown its resilience,” Ifo president Clemens Fuest said after the closely watched index rose to 91.8 points from 90.8 points in March.

Companies were less pessimistic about the outlook for the economy, after the mood plunged in March following the Russian invasion of Ukraine, Ifo said.

The overall indicator lost almost eight points in March, while forecasts took a bigger knock than at the start of the coronavirus pandemic two years ago.

The assessment of current conditions was “minimally better”, Fuest said, adding that sentiment among businesses had “stabilised at a low level”.

“The initial shock of the war seems to have abated somewhat, but given the multitude of risks, it is too early to start talking about a turning point,” said Elmar Voelker, an analyst at LBBW bank.

The continuing impact of the conflict in Ukraine was “hard to estimate”, including the possibility of Russian gas supplies being cut off, Voelker said.

Germany, like many European countries, is highly dependent on deliveries of natural gas from Russia to meet its energy needs.

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In the chemicals sector, where the impact of the taps being turned off could be significant and lead to production stops, expectations worsened, according to the Ifo survey.

Confidence in the construction sector also plunged against the overall trend to its lowest level since May 2010, as the sector wrestled with persistent disruptions to supply.

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BUSINESS

Germany’s BMW to put €1 billion into electric vehicles in Austria

German auto manufacturer BMW said on Monday it would invest "around one billion euros" in the production of electric vehicles at a plant in Austria from 2025.

Germany's BMW to put €1 billion into electric vehicles in Austria

Altogether, 600,000 units a year should roll off the line at the factory in Steyr under the investment plan, set to run until 2030, BMW said in a statement.

From 2025, BMW will “develop and produce the next generation of e-drives” at the Austrian site, BMW’s production chief Milan Nedeljkovic said.

The refurbishment of the plant will see two new production lines added and the location expanded by 60,000 square metres.

The new facilities would require €710 million in investment, while €230 million would be dedicated to boosting vehicle development at Steyr.

“Around half” the 4,400 employees at the site would be working on “e-mobility” by 2030, plant boss Alexander Susanek said.

The Bavarian manufacturer said it aimed to have two million electric vehicles on the road by 2025, promising 13 new electric models and a revamp of its Mini brand.

BMW has already said it will spend €400 million to upgrade its home factory in Munich to produce electric vehicles.

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