Ifo: US tariffs dampen sentiment among East German companies

The US tariffs and disappointed expectations of the new German government are causing a poor mood among companies in eastern Germany. The business climate index for the regional economy fell by 1.5 points to 86.5 points in April compared to the previous month, according to the Ifo economic research institute in Dresden. With the exception of the construction industry, expectations worsened in all sectors.

US tariffs and still little confidence in the new federal government

The reasons for the poor mood among East German companies are manifold, said Joachim Ragnitz, deputy head of the Ifo branch in Dresden, when asked about the situation. "In addition to the tariffs imposed by the USA on numerous products, the disappointment following the announcements of the new German government has also caused disillusionment."

In the manufacturing industry, the business climate has deteriorated significantly. Although companies improved their assessment of the current situation slightly, they were considerably more pessimistic about the future than in the previous month.

The mood in the service sector also deteriorated significantly. Here, the current business situation was assessed as noticeably worse and companies were somewhat less favorable about their business expectations for the coming months. A similar picture emerged in the retail sector, with only the retail trade taking a slightly more optimistic view of future business development than in the previous month.

Construction industry the only sector to be slightly more optimistic

In contrast, the business climate in the main construction industry in eastern Germany has improved somewhat. The construction companies surveyed stated that although their business situation had deteriorated slightly, their expectations for future business development were somewhat more positive.

The Ifo Business Climate East Germany is based on around 1,700 reports from companies. Each month, the survey asks about the current business situation and expectations for the next six months, but not the exact reasons for this.