Industrial and construction sectors in East Germany are thriving, showcasing growth; however, retail trade is experiencing a downturn.
Eastern Germany Sees Slight Improvement in Business Climate, According to ifo Institute
The business climate in Eastern Germany has shown a slight improvement in July 2025, as reported by the Leibniz Institute for Economic Research (ifo). The ifo Business Climate Eastern Germany index, based on around 1,700 monthly surveys from firms in manufacturing, construction, wholesale, and retail, has brightened somewhat.
The current business situation index in Eastern Germany has also improved, with a rise from 96.3 points in June to 96.5 points in July. This indicates that more companies in the region are reporting a positive business situation compared to the previous month.
The number of companies expecting an improvement in their business situation over the next six months has also increased, rising to 48% in July from 46% in June. On the other hand, the number of companies reporting a deterioration in their current business situation has declined to 14% in July, compared to 15% in June. The number of companies reporting no change in their current business situation remained relatively stable, at 39% in July, compared to 42% in June.
The improvement in the Business Climate Index is primarily driven by a more optimistic outlook for the next six months, as the expectations index rose to 97.9 points from 97.4 points in June. This suggests a continued improvement in business sentiment in Eastern Germany.
It is important to note that the exact numerical values for the July 2025 reading of the Business Climate Index in Eastern Germany are not explicitly detailed in the available sources. However, the general trend indicates a positive shift in the business climate of the region.
The ifo Business Climate Index is a monthly indicator, and the surveys conducted in July were focused on businesses in Eastern Germany. The index is calculated based on the companies' evaluations of their current business situation and expectations for the next six months. A standardized value is calculated for the overall index, with 100 points representing a neutral sentiment.
While the specific numerical figure for Eastern Germany's business climate in July 2025 is not reported, the general German business climate is modestly rising to 88.6 points, indicating fragile but positive momentum in the broader economy. This is the highest level since May 2024, reflecting a cautious optimism amid ongoing fragilities in the economy, with manufacturing showing slight improvement and the services sector facing some setbacks.
In summary, the business climate in Eastern Germany is improving slightly as of July 2025, according to the ifo Institute's surveys. The exact quantitative values for the index in that region at this date are not reported in the publicly available material. However, the general trend indicates a positive shift in the business climate of the region, contributing to the broader positive momentum in the German economy.
The slight improvement in Eastern Germany's business climate in July 2025, as reported by the ifo Institute, could potentially impact various sectors of the local economy, including the food industry, given that firms in manufacturing, construction, wholesale, and retail saw improvements. On a wider scale, this positive shift in the business climate may attract more investments in the finance industry, contributing to a potential growth in businesses across Eastern Germany.
