Frankfurt, April 28 (Bloomberg) -- German business confidence probably rose this month on expectations the end of the Iraq war may spur a recovery in the country's stagnant economy, a survey of analysts showed before today's Ifo report. The Ifo economic institute's index of 7,000 companies will probably increase to 88.6 from March's 88.1, according to the median forecast of 26 economists surveyed by Bloomberg News. Ifo said half the replies were received after U.S.-led forces gained control of Baghdad on April 9. ``A gain in confidence would reflect the immense relief of executives at the end of the Iraq war,'' said Jan-Paul Ritscher, an economist at Hamburgische Landesbank, who expects the index to increase to 89. ``Now, companies remember that domestic demand is weak and that a jump in investments is unlikely.'' Europe's largest economy, which failed to grow in the fourth quarter, is struggling to expand. Factory orders, retail sales and exports fell in February. German Chancellor Gerhard Schroeder's government will today pare its forecast for 1 percent growth this year, according to lawmakers of his ruling coalition. Siemens AG, Deutsche Bank AG and Volkswagen AG, Germany's biggest manufacturer, No. 1 bank and top carmaker, on Thursday reported deteriorating first-quarter results. DaimlerChrysler AG, the world's fifth-largest automaker, said rebates and discounts increased in the U.S. car market, making it harder for its Chrysler unit to achieve its earnings target. Munich-based Ifo, which is in part government-funded, will release its report today at 10 a.m. in Frankfurt. Analysts' forecasts for the main index ranged from 87 to 89.6.
Bayer, Adidas
Some companies are holding up. Bayer AG, the nation's biggest drugmaker, on Friday said it sees operating profit rising more than 10 percent this year. Adidas-Salomon AG, the world's No. 2 sporting-goods maker, probably boosted first-quarter profit 18 percent, according to analysts surveyed by Bloomberg News. Still, the Ifo index declined in the second half of last year. Italian and Belgian business confidence fell in April. French executive confidence, to be released on Tuesday, probably rose, according to economists surveyed by Bloomberg News. The U.S. economy, destination of a 10th of German exports grew a less-than-expected annual 1.6 percent in the first quarter, after 1.4 percent in the previous three months. The euro has gained almost a quarter against the dollar in the past year, making German exports more expensive.
`Unspectacular' Recovery
The Organization for Economic Cooperation and Development on Thursday cut its forecast for global growth this year to 1.9 percent from a previous estimate of 2.2 percent, predicting an ``unspectacular'' recovery even after the end of the Iraq war. The U.S. Central Command in Iraq is focusing on restoring law and order and setting up a new administration. U.S. President George W. Bush said on Friday there is ``some evidence'' that Saddam Hussein is dead. The European Central Bank, which has pared interest rates for the dozen nations using the euro twice since early December to a 3 1/2-year low, said the euro region's economy may begin to recover in the second half. German institutional investor and analyst confidence rose for a fourth month in April, a report by the ZEW Center for European Economic Research showed. ``The fact that the uncertainties have declined and that the oil price is at a level well below the one that was feared, makes an economic rebound in the second half more realistic,'' European Central Bank council member Jean-Claude Trichet said after meeting with Group of Seven finance ministers and central bankers in mid- April.//www.bloombrg.com