Economic optimism or mood? The situation in Germany in April 2025!

Economic optimism or mood? The situation in Germany in April 2025!

Mannheim, Deutschland - The current report of the German Business Panel (GBP) of April 16, 2025 shows a mixture of optimism and uncertainty in the German economy. The latest coalition agreement between the CDU/CSU and SPD has ensured careful optimism for many companies. This is particularly noteworthy after the number of companies that expect a continuation of their business, from 82.1 % in October 2024 to 87.0 % in March 2025.

However, the mood is severely affected by the recently announced tariffs of the US government, which primarily affect industrial industries. After the announcement of these tariffs, which affect mechanical engineering products and automotive supplements, the proportion of companies that are planning to continue their activities at short notice fell to 85.1 %. At the same time, sales and profit forecasts fell by 1.2 percentage points each. Export -dependent sectors are particularly affected, whereby the investment expectations in the processing industry decreased by 9.5 percentage points and in retail for around 3 points.

economic challenges and perspectives

As a survey of the Institute of the German Economy (IW) , the economic situation in Germany remains critical. Many companies burden high costs and persistent uncertainties. Director Michael Hüther describes the current crisis as complex. Out of 49 business associations surveyed, 31 rate the situation less than in the previous year, which indicates a deep economic state of concern. The areas of construction, automotive industry and mechanical engineering are particularly affected

For the coming years there will also be bright spots. While the IW predicts growth of only 0.1 % for 2025, the OECD optimizes the location with a growth forecast of 0.7 %. Experts see good perspectives, especially in the real estate, disposal and insurance sector. However, the construction and mechanical engineering industry face further challenges, while other sectors such as the freight forwarding industry and the pharmaceutical industry do better.

Need for political measures

companies are increasingly concerned about increasing costs, especially in the case of material, administration and energy, after the announcement of the US tariffs. Industry leaders are calling for political measures to cope with global uncertainties. In particular, the decline in investment intentions in the processing industry illustrates the need for fundamental reforms in Germany. These include reforms in the pension system, increasing transparency about asset status and considerations to increase the retirement age.

Hope for positive changes is nourished by the upcoming Bundestag elections. Investment packages and structural reforms could give urgently needed impulses. Nevertheless, the high level of savings of private households remains an indicator of the ongoing fear of the future and the uncertainties in the German economy.