Euphoria in East Germany: Ifo index surprisingly jumped up!

Euphoria in East Germany: Ifo index surprisingly jumped up!

In May 2025, companies in eastern Germany will show an unexpected positive development, as the Ifo Institute reports. The mood in the East German economy has noticeably improved, which is reflected in the rising business climate index of the Ifo Institute. This index increased by 2.6 points and now reached 89.2 points. This announcement was made via the institute's Dresden branch, where Joachim Ragnitz, the deputy director, described the increase in business expectations as surprising.

The improved expectations of East German companies exceeded the average development in Germany. This shows that companies in eastern Germany assessed both their current situation and their expectations for the next few months more positively than in April. The climate had previously been particularly dampened by pessimistic assessments.

Improvements across industries

The manufacturing sector in particular recorded positive developments in May. The mood in the services sector also brightened, giving the entire industry optimism for the coming months. Companies in the retail sector assessed their current situation as requiring improvement, while wholesalers gave a less positive assessment of the situation. Nevertheless, trade as a whole appears to have a more optimistic outlook for the future.

The business climate has also improved in the construction industry. This happened despite a negative assessment of the current situation, but the outlook for the coming months is developing positively. This development may have been encouraged by a correction of the previously dominant negative assessments in April.

Causes for the increase

One of the main reasons for the improved mood is the general relaxation of the situation. This relaxation is strongly associated with the positive growth impulses that are expected from the new federal government. Joachim Ragnitz expressed the hope that the economic low point in East Germany has been overcome.

The Ifo business climate index is based on around 1,700 monthly reports from companies from different sectors. This illustrates the broad basis on which the positive developments are rated. The increased expectations in the East German economy are a glimmer of hope for the future and suggest that the upswing could continue in the coming months.

The detailed analyzes of the mood in the economy show that not only the east of Germany is affected by the improvement, but that the west is also reacting positively to the stabilizing general conditions. The developments in May could lay the foundation for sustainable stability in the German economy.

Further details and a more in-depth insight into the topic are provided by the reporting from Bietigheimer Zeitung and Merkur.