Economy in Baden-Württemberg: Slight hope, but no turnaround in sight!

Economy in Baden-Württemberg: Slight hope, but no turnaround in sight!

The economic situation in Baden-Württemberg is showing slight signs of stabilization, although there is no prospect of a real recovery. A survey by the Baden-Württemberg Association of Chambers of Industry and Commerce (BWIHK) showed that 18 percent of the companies surveyed expect better business in the next twelve months. This corresponds to an increase of two percentage points compared to the beginning of the year. Despite this slight optimism, the proportion of companies that rate their current business situation as good remains low at just 26 percent.

At the same time, the proportion of pessimistic companies fell from 29 to 24 percent. This shows that while companies see some upside potential, general skepticism remains. What is particularly striking is that 22 percent of those surveyed rate their situation as bad, which remains constant compared to the previous survey. The survey, conducted from April 22 to May 13, covered 3,676 businesses of all sizes and industries.

Challenges for the economy

In his comment on the survey, BWIHK President Jan Stefan Roell emphasized the need for decisive political action. He called for reliable and competitive framework conditions to promote investments. Currently, only 22 percent of investing companies plan to increase their spending in the next twelve months, while a third of companies plan to reduce investments. The main business risks are weak domestic demand, rising labor costs and geopolitical tensions. The construction, retail and hospitality sectors are particularly affected by this, while financial and consulting service providers are seen as a bright spot.

However, the economy is being burdened by further structural crises. Economics Minister Dr. Hoffmeister-Kraut describes the situation as a profound economic and structural crisis. Another year of recession is forecast for 2024, with the country's economic output falling compared to the national average. The economic situation is also made particularly interchangeable by the current data on production figures: for 2024, a decline in incoming orders of -5.3 percent and in production of -6.6 percent were recorded.

Retail and inflation

Additionally, retail is suffering from high prices and consumer uncertainty; This recorded a decline in real sales figures of -1.1 percent in 2024. This is in line with general economic developments, which are burdened by labor market-related uncertainty. The unemployment rate in Baden-Württemberg was 4.6 percent in February 2025, while it was 6.4 percent in Germany.

The inflation rate, which stagnated at 2.2 percent in 2024, will increase slightly at the beginning of 2025. In February 2025, an inflation rate of 2.5 percent was found in Baden-Württemberg and 2.3 percent in Germany. Looking ahead, the Ministry of Economic Affairs predicts that the price-adjusted gross domestic product could decline by around 0.5 percent in 2025 compared to the previous year.

With these challenges in the background, Dr. Hoffmeister-Kraut fundamental economic policy reforms and improvements to the framework conditions for entrepreneurship, especially for medium-sized businesses and start-ups. The current signals from surveys and forecasts make it clear that a comprehensive strategy is urgently needed to sustainably stabilize the weakening economy in Baden-Württemberg and to provide it with new impulses.

For further information on the economic situation in Baden-Württemberg, visit the websites of t-online.de and the state government of Baden-Württemberg at t-online.de and baden-wuerttemberg.de.