BERLIN
The German business community has yet to feel any optimism despite the new government, as the economy continues to stagnate, and while the government reportedly identified the issues, “it has yet to deliver the necessary impact,” according to a recent survey.
The German Chamber of Industry and Commerce (DIHK) released its Fall 2025 business survey Thursday, which reflects expectations of around 23,000 firms from all sectors and regions.
Helena Melnikov, chief executive of DIHK, said the situation did not improve in the summer, and instead, “the sentiment deteriorated slightly once again.”
Chancellor Friedrich Merz had promised the business community that the economy would begin to recover by the summer.
Melnikov stated that the momentum needed for a real recovery in the German economy is lacking, and DIHK estimates stagnation for the German gross domestic product (GDP) this year, and only a 0.7% growth in 2026.
She noted that structural problems continue to be a major hurdle for companies, while rising social security contributions and the recent rise in the minimum wage significantly affected the situation, especially in labor-intensive sectors like accommodation and restaurants.
She said corporate investments are still 10% below pre-pandemic levels, even though it has been five years since the start of the coronavirus pandemic, urging the government to control costs like social security, significantly reduce bureaucracy and implement a promised electricity tax reduction, not only for industry but for all businesses.
DHK estimates a 1% decline in exports this year due to US tariffs, which comes after a 2.1% decline last year, while next year is expected to bring a slight rise of 0.5%
The DIHK’s confidence index, measuring the current economic situation and the participating companies’ business expectations, declined 1 point to 93.8. Out of 23,000 firms surveyed, 15% expect the economic situation to improve in the next 12 months, while 27% think it will get worse.
Some 22% of the respondent firms plan to increase investments and 31% plan to decrease, while only 11% plan to boost their workforce. A total of 24% think about layoffs, and 56% of the companies see labor costs as one of their biggest business risks.
Meanwhile, the German economy shrank 0.2% in the second quarter after a 0.3% growth in the first quarter, avoiding a recession and seeing stagnation in the third quarter. High energy costs, weak global orders and high US tariffs are the most pressing issues against growth.
Germany suffers from the chip shortage, causing production halts in the auto industry and China’s advancements in production, as the country no longer needs Germany for the products it once bought instead of made.
The German government promised to pull the economy out of stagnation with a sharp rise in infrastructure and defense spending, but the effects of the measures will take longer than expected to be seen.
Germany revised its growth forecast for 2025 from 0% to 0.2% on Oct. 8, while estimating that the economy will recover with a growth of 1.3% in 2026 and 1.4% in 2027, led by public spending.
