German Economy Faces Deepening Challenges Heading Into 2025

Business associations report worsening conditions, with high costs, bureaucracy, and global uncertainties fueling pessimism and job cuts.

A survey by the German Economic Institute (IW) reveals that 31 of 49 business associations view their current situation as worse than 2023, with only 16 expecting production growth in 2025.
High costs for energy, labor, and materials, along with excessive bureaucracy, are cited as key factors hindering competitiveness and growth.
More than half of the surveyed associations anticipate job cuts in 2025, particularly in sectors like steel, mechanical engineering, construction, and automotive industries.
Germany's top 100 companies saw a 19% drop in operating profits in 2024, marking the second consecutive year of decline, with over 30,000 jobs lost globally.
Public sentiment mirrors economic concerns, as 63% of Germans express anxiety about 2025, citing inflation, geopolitical crises, and dissatisfaction with political crisis management.