German companies at a standstill: DIHK warns of economic stagnation

German companies at a standstill: DIHK warns of economic stagnation

The mood in the German economy remains subdued. After two years of recession, the current DIHK economic survey shows that there is still no sustained recovery. At the end of the survey period, which ran from the end of March to the end of April 2025, the DIHK sentiment index was 94.9 points, which is in the pessimistic range. Helena Melnikov, General Manager of the German Chamber of Commerce and Industry (DIHK), emphasizes that all indicators are negative and this underlines the tense situation. The DIHK expects gross domestic product to decline by 0.3 percent in 2025.

Companies expect the new federal government to provide positive stimulus for the economy. Nevertheless, the economic policy framework is considered the greatest business risk for 59 percent of the companies surveyed. Domestic demand and rising labor costs are also perceived as major challenges, with 57 percent and 56 percent of companies respectively identifying these factors as risks. Energy-intensive companies in particular find themselves burdened by high energy and raw material prices; 71 percent report noticeable burdens due to these costs.

Economic uncertainties and outlook

Although companies' business expectations are showing a slight improvement, they remain pessimistic overall. Around 26 percent of companies are currently negative about the future, while only 16 percent are optimistic. Around a quarter of the companies rate their situation as good, just as many as bad. Uncertainties about the future economic policy course and structural problems are weighing heavily on the mood of companies.

There are signs of a gradual recovery, particularly in industry and construction. Nevertheless, exports are losing traction and many companies are reluctant to invest. Almost a third plan to scale back investments, resulting in a negative investment balance of minus seven points. The DIHK is therefore calling for clear political measures to improve the economic situation. Proposals include, among other things, reducing the electricity tax and introducing a regulation to facilitate depreciation.

Signal for the future

Despite the challenging conditions, companies in Germany are showing resilience. The DIHK does not expect economic output to shrink in 2023, but neither does it expect any growth. ILja Nothnagel from the DIHK emphasizes that there are no signs of a broad upswing and that the economic situation of companies is still without dynamism. Incoming orders are falling and the proportion of companies that see high energy prices as a risk has fallen, but remains high at 65 percent.

In addition, the shortage of skilled workers, which 62 percent of companies cite as a risk, is increasingly becoming a problem. The investment climate is described as mixed, with 24 percent of companies planning to reduce investments and 28 percent aiming to increase them. Nothnagel is therefore calling for new impetus for private investment and the expansion of infrastructure, as well as political measures to reduce bureaucracy, which is seen as a significant problem.

The outlook for German companies remains tense. The new economic policy framework could be crucial in strengthening hopes for a more stable and growing economy.

Further details on the current DIHK economic survey can be found on lawandpolitics.com and rnd.de be retrieved.