Mood in the economy
IFO: mood in East German companies increases again
East German companies are more optimistic again. The IFO Institute has a surprisingly strong increase in business climate-and blames a central factor for this.
The mood in the East German economy improved significantly in May. The business climate index of the IFO Institute for the East rose by 2.6 points to 89.2 points, as the Dresden branch of the institute announced. “The significant increase in the business expectations of East German companies is surprising,” said Joachim Ragnitz, deputy head of the IFO branch in Dresden. The expectations would have improved across Germany, “but not as strong as in the East German countries”.
The companies surveyed in the east assessed both their current situation and the expectations for the coming months more positively than in April. This applies above all to the manufacturing business. In the service sector, too, the climate broke out noticeably – the companies are considerably more optimistic for the coming months than last, while the current business situation improved slightly.
Retail optimistic, wholesale dealing carefully
A mixed picture was shown in East German trade: While retailers rated the ongoing business significantly better, the situation assessment in the wholesale was noticeably worse. Nevertheless, the trade looked much more optimistic into the future than last.
The business climate also improved in the construction industry. The current situation was assessed somewhat worse, but expectations of the coming months attracted vigorously.
Customs conflict burdened less mood
One reason for this is a correction of the strongly negative assessments in April: “In the previous month, companies in East Germany were even more pessimistic than those in Germany as a whole, probably against the background of the tariff increases announced by the US government.” According to Ragnitz, companies see significantly better business prospects because the situation has now relaxed and the new federal government has also promised noticeable growth impulses.
Hope for sustainable recovery is growing
“In this respect, there is hope that the deep of the economic development has passed, at least in East Germany,” emphasized Ragnitz.
The IFO business climate East Germany is based on around 1,700 monthly reports from companies from industry, service, trade and construction. The companies are asked about the current situation and their expectations for the next six months.
dpa
Source: Stern
