The IFO result is not that interesting, since the composite index has actually moved very little, and is still well below earlier highs. What is slightly interesting is that the improvement is due to current conditions, which firmed slightly (ie May is not a VERY bad month, see the chart below), but the expectations index continues to move down. This seems to suggest that the current business situation has been regularly exceeding previous expectations in recent months (growth in demand for exports in Russia and Eastern Europe perhaps), but that this situation will not last forever. At some point the "unusual circumstances" will not continue and the cold light of normality will set in.
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