Austrian and German regional business confidence shows modest improvement

Bank Austria's economic sentiment indicator rose slightly in May to 1.4 points, though it remains in negative territory. The bank expects the Austrian economy to stagnate in Q2, with moderate growth possible in the second half of the year and an annual GDP increase of 0.8 %. Unemployment is projected at 7.5 %, inflation at 3.4 %, and a further 0.25‑percentage‑point rate hike is anticipated in September.

In Germany’s Saxony‑Anhalt region, a survey of small and medium‑sized enterprises found that 57 % now rate their situation as good or very good, up from 49.5 % a year earlier. The services sector is driving the optimism, while manufacturers continue to face a deepening crisis. Only 46 % of firms plan new investments – the lowest level in a decade – and most are focused on replacements or energy‑efficiency measures. The ongoing Middle‑East conflict and high energy prices are cited as constraints on the recovery.