Despite promises of recovery from the new government, Germany’s economy continues to stagnate, with no signs of renewed momentum. According to the latest report from the German Chamber of Industry and Commerce (DIHK), the country still lacks the drive needed for a genuine economic rebound.
The DIHK’s Autumn 2025 business survey, which reflects the expectations of around 23,000 companies from across all regions and sectors, shows that confidence among firms has once again weakened.
DIHK Chief Executive Helena Melnikov said that conditions failed to improve over the summer — on the contrary, “sentiment deteriorated slightly once again.”
Chancellor Friedrich Merz had earlier promised that the economy would begin to recover by the summer. However, Melnikov noted that no tangible progress has been made, with the chamber now expecting zero GDP growth this year and only a 0.7% increase in 2026.
She pointed to structural challenges, rising social security contributions and the higher minimum wage as major pressures on businesses, particularly in labour-intensive sectors such as hospitality and accommodation.
Corporate investment, she added, remains 10% below pre-pandemic levels, even five years after the onset of COVID-19. The DIHK is urging the government to reduce bureaucracy, curb costs such as social security payments, and extend the promised cut in electricity tax to all businesses, not just industrial ones.
The chamber also forecasts a 1% drop in exports this year due to U.S. tariffs, following a 2.1% decline in 2024, though a modest 0.5% rise is expected next year.
The DIHK confidence index, which measures both the current economic situation and business expectations, slipped by one point to 93.8. Only 15% of surveyed companies expect an improvement over the next 12 months, while 27% foresee a further deterioration.
Meanwhile, 22% of firms plan to increase investment, 31% intend to cut back, and just 11% plan to expand their workforce, compared to 24% considering layoffs. More than half (56%) of respondents identified labour costs as one of their biggest risks.
Germany’s economy contracted by 0.2% in the second quarter after a modest 0.3% expansion in the first, narrowly avoiding a recession but showing no growth in the third quarter. Economists cite high energy prices, weak global demand and U.S. tariffs as the main obstacles to growth.
The country also faces ongoing chip shortages affecting car production, while China’s growing self-reliance in manufacturing has reduced demand for German exports.
The German government has pledged to stimulate growth through higher infrastructure and defence spending, but experts warn that the effects of these measures will take longer to materialise.
In October, Berlin raised its 2025 growth forecast from 0% to 0.2%, projecting 1.3% growth in 2026 and 1.4% in 2027, largely driven by public spending.
Leaders of the Shanghai Cooperation Organisation (SCO) are gathering in Bishkek for a summit focused on trade, investment and transport as the...
Israel and Greece have signed a €3 billion defence agreement that will see Israel build a new multi-layered air-defence system for Greece....
Russian air attacks on Kyiv and the surrounding region have killed four people and injured more than a dozen others, Ukrainian officials said, mark...
Azerbaijani President Ilham Aliyev and Armenian Prime Minister Nikol Pashinyan have concluded talks in Bishkek, the capital of Kyrgyzstan, as leaders gather for the Shanghai Cooperation Organisation (SCO) summit.
Iran has reached an understanding with Oman on transit arrangements through the Strait of Hormuz, but the waterway will remain closed until the U.S. fulfils its commitments, a senior Iranian diplomat said on Saturday.
U.S. forces struck two Iranian rocket launchers on Larak Island on Sunday, with Tehran responding by launching ballistic missiles at two U.S. bases in Jordan in the first direct U.S.-Iran military escalation in weeks.
Russia views NATO’s growing military activity in the Arctic as a direct threat to its national security, Foreign Minister Sergei Lavrov said.
As leaders from across Eurasia gather in Kyrgyzstan for the Shanghai Cooperation Organisation (SCO) summit, the meeting is bringing together countries with very different interests, from China and Russia to India, Iran and Azerbaijan.
Volkswagen is heading towards a decisive showdown with labour representatives as Germany's largest carmaker weighs sweeping restructuring measures that could lead to factory closures and tens of thousands of job losses.
Online fast-fashion retailer Shein is seeking to raise up to $1.77 billion in a Hong Kong IPO after its valuation fell around 70 per cent from its private-market peak four years ago.
Kazakhstan has received a fresh vote of confidence in its economy after S&P Global Ratings upgraded the country’s credit rating, citing stronger public finances, solid reserves and steady economic growth.
AnewZ Business Europe, a new weekday programme, takes viewers inside companies driving growth and innovation across the continent, with Brickken CEO Edwin Mata joining the programme for its first episode with host Chief Global Editor Guy Shone. The show airs every Friday.
Once associated mainly with Muslim-majority countries, Islamic finance has become a global industry. Its assets reached around $5.98 trillion in 2024, according to ICD-LSEG, as more countries explore Shariah-compliant finance.
You can download the AnewZ application from Play Store and the App Store.
What is your opinion on this topic?
Leave the first comment