German Economy Associations in Germany Assess the Prospects for the Coming Year as Poor
According to a survey by the Institute of the German Economy (IW), published on Friday, the prospects for the coming year are poor. Thirty-one of the 49 economic associations describe the current situation as worse than a year ago. The reasons are diverse: high costs for energy, labor, materials, and excessive bureaucracy have burdened companies and made them barely able to keep up with international competitors. The uncertain world situation, in the opinion of the respondents, hampers exports, and the political chaos in their own country hinders investments – who does not know where the politics will steer the next few years, invests less in new machines, technologies, or vehicles.
Looking at the coming year, the associations remain pessimistic: 20 of the 49 respondents expect a decrease in production, while only 16 expect an increase. The optimists include companies from the energy and water industry, the pharmaceutical industry, paper mills, and logistics.
The poor mood is likely to primarily affect the labor market, according to the survey: 25 associations expect a job reduction in their sectors for the coming year, while only seven associations expect an increase in employment. This includes, for example, the pharmaceutical industry, the aerospace industry, or the investment sector. There will likely be fewer jobs, especially in the industry, for instance, in the iron and steel sector, the machinery industry, or the construction sector.
“The German economy will not get moving again in 2025” said IW Director Michael Hüther. “Especially alarming is the multitude of problems that companies are confronted with.” Previous crises often had direct triggers and were less far-reaching and thus easier to overcome – now the situation is uncertain in both the domestic and international arenas. “The next German government must create a sustainable economic perspective again. Only this way can we regain the competitive edge” said Hüther.