Businesses' Spirits Remain Low Across Sector - Industry Offers Optimism - Persistent Negative Sentiment Across Multiple Businesses - Sector Remains Optimistic
German business expectations show a modest improvement in the spring, but overall remain pessimistic, according to the German Chamber of Commerce and Industry (DIHK). The survey, which polled approximately 23,000 companies across various sectors and regions, revealed that 26% of respondents have a negative outlook towards the future, down from 31% at the beginning of the year. Conversely, 16% of companies are optimistic, a 2-percentage point increase compared to the previous survey.
The survey's findings indicate a mixed assessment of the current economic situation. While 25% of the companies rate the current situation as good, an equal number view it as poor. This dichotomy marks the worst evaluation of the situation since the onset of the coronavirus pandemic, as explained by DIHK's president Helena Melnikov.
According to Melnikov, several factors are influencing the overall pessimism. The weak domestic economy, dampened foreign demand, and persistent issues such as skills shortages, rising labor costs, and high energy and raw material prices are all contributing factors. However, Melnikov remains hopeful about the industry and construction sectors, where signs of recovery are emerging and could potentially drive the economy once again.
To foster this recovery, clear signals from federal politics are necessary. Melnikov called for the promised shift in economic policy to be felt by businesses, as companies have yet to notice any effects. The DIHK's president emphasized the need for faster approval and planning procedures, lower energy costs, and streamlined bureaucracy.
The DIHK also expressed concern over potential U.S. tariff increases, which could have a severe impact on the German economy. According to Melnikov, this would be detrimental to the nation's businesses. The DIHK's forecast expects the German economy to contract by 0.3% in 2025, marking the third consecutive year of economic decline, a feat not observed since the post-World War II period.
Included in the research was a survey of German companies worldwide, which revealed a significant decline in optimism about economic development at their international locations. Only 19% of these companies expect improvement in the local economies over the next year, down from 27% in autumn 2024, while 33% expect deterioration, up from 22% previously. The negative outlook is further reflected in a sentiment indicator that has dropped significantly, contributing to increased uncertainty among German firms.
Domestically, the business sentiment index stands at 94.9, indicating that pessimists outnumber optimists among the surveyed companies. German exports are projected to decline by 2.5% in 2025, underscoring the challenging trade environment. Rising unemployment rates in May 2025 add to these economic worries.
[1] DIHK. (n.d.). German business confidence worsens further in spring 2025. Retrieved from https://www.dihk.de/fileadmin/user_upload/DE/Pressemitteilungen/2025/Pressemitteilung_DE_08_05_2025_Geschaeftsklauen_SI_2025-Q2.pdf[2] Ifo Institute. (2025, May 6). German business confidence worsens in May 2025. Retrieved from https://www.ifo.de/en/news/news-releases/detail/german-business-confidence-worsens-in-may-2025[3] DIHK. (n.d.). Business expectations decline significantly in Q1 2025. Retrieved from https://www.dihk.de/fileadmin/user_upload/DE/Pressemitteilungen/2025/Pressemitteilung_DE_07_04_2025_Geschaeftsklaue_Q1_2025.pdf[4] DIHK. (n.d.). German GDP expected to contract by 0.3% in 2025. Retrieved from https://www.dihk.de/fileadmin/user_upload/DE/Pressemitteilungen/2025/Pressemitteilung_DE_10_03_2025_Wirtschaftswachstum_2025.pdf[5] DIW. (2025, May 12). Unemployment rate rises in May 2025. Retrieved from https://www.diw.de/de/pressemitteilungen/4066
- The survey conducted by the DIHK revealed that EC countries' businesses, particularly German ones, show pessimistic views towards their employment policies, with 26% of respondents having a negative outlook and only 16% being optimistic.
- To alleviate the current economic challenges, including pessimistic business expectations and rising unemployment rates, the DIHK urged federal politics for clear signals and a shift in economic policy, emphasizing the need for faster approval and planning procedures, lower energy costs, and streamlined bureaucracy.
