ifo Business Climate Eastern Germany: Economy on the Upswing (July 2020)
The eastern German economy continued to recover in July 2020. The ifo Business Climate Index for the entire regional economy in eastern Germany climbed from 88.8 points to 92.5 points. Survey participants’ assessments of the current situation and their business expectations both rose strongly compared to the previous month.
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Eastern German manufacturing recorded the strongest increase in the business climate. The industrial companies surveyed rated their current business much better and are now looking to the future with greater optimism.
In the eastern German service sector, too, the ifo Business Climate Index rose strongly in July. Participating service providers raised their outlook considerably higher, while their assessments of the current situation also improved significantly.
The business climate in eastern German trade was tangibly brighter. However, the wholesalers surveyed assessed their current business less positively than in the previous month. Among retailers, both subindices rose.
In eastern German construction, the ifo Business Climate Index saw a strong uptick in July. While the construction companies surveyed raised their assessments of the current situation only slightly, their business expectations improved enormously.
Joachim Ragnitz and Marcel Thum
Executive Directors, Dresden Branch of the ifo Institute
ifo Business Climate Eastern Germany
(Index, 2015 = 100, seasonally adjusted)
| 07/19 | 08/19 | 09/19 | 10/19 | 11/19 | 12/19 | 01/20 | 02/20 | 03/20 | 04/20 | 05/20 | 06/20 | 07/20 | |
| Climate | |||||||||||||
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| Expectations |
Source: ifo Business Survey.
© ifo Institute
ifo Business Climate Eastern Germany by Sector
(Balances, seasonally adjusted)
| 07/19 | 08/19 | 09/19 | 10/19 | 11/19 | 12/19 | 01/20 | 02/20 | 03/20 | 04/20 | 05/20 | 06/20 | 07/20 | |
| Eastern Germany | |||||||||||||
| Manufacturing | |||||||||||||
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| Trade | |||||||||||||
| Construction |
Source: ifo Business Survey.
© ifo Institute
The ifo Business Climate Eastern Germany is based on approx. 1,700 monthly survey responses from firms in manufacturing, construction, wholesale, and retail. The firms are asked to give their assessments of the current business situation and their expectations for the next six months. They can characterize their situation as “good,” “satisfactory,” or “poor” and their business expectations for the next six months as “more favorable,” “unchanged,” or “more unfavorable.” The balance value of the current business situation is the difference of the percentages of the responses “good” and “poor”; the balance value of the expectations is the difference of the percentages of the responses “more favorable” and “more unfavorable.” The business climate is a transformed mean of the balances of the business situation and the expectations. For the purpose of calculating the index values, the transformed balances are all normalized to the average of the year 2015.
