A brighter future appears promising for East Germany's economic scene
In a recent report by the Ifo Institute in Dresden, it was revealed that the business climate in Eastern Germany showed a mixed but broadly improving trend across sectors in July 2025.
The industry sector experienced a significant improvement, with companies rating both the current situation and future expectations more positively compared to previous months. This optimism was also reflected in the construction industry, where business expectations rose significantly. However, the current business situation in the construction industry was assessed slightly worse in July compared to June.
The retail sector, on the other hand, experienced a notable slowdown. Both current business conditions and outlook were rated significantly worse in July. The service sector showed a slightly more positive outlook for the coming months, although the current business situation was assessed slightly worse.
The Ifo Business Climate East Germany survey includes reports from companies in all these sectors, providing a comprehensive overview of the region's business climate. Wholesale was assessed slightly more positively in terms of current situation and expectations in July.
Overall, the East German economy’s business climate improved in July 2025 compared to June, with stronger optimism in industry and construction contrasting with weaker retail and a cautiously optimistic service sector outlook.
In a broader context for Germany, the Ifo Business Climate Index had been rising steadily through mid-2025, with business sentiment improving moderately in manufacturing, services, retail, and construction nationally. The optimistic outlook may partly be due to expectations that Germany’s economy will overcome its crisis phase by 2026.
This report offers a promising outlook for the industry and construction sectors in Eastern Germany, while highlighting areas of concern in the retail sector. The service sector shows mixed but slightly improving future prospects. The Ifo Institute will continue to monitor these trends and provide regular updates on the business climate in Eastern Germany.
The industry sector in Eastern Germany, as mentioned in the report, showed a significant improvement, with companies rating both the current situation and future expectations more positively compared to previous months. On the other hand, the retail sector experienced a notable slowdown, with both current business conditions and outlook being rated significantly worse in July.
