Only a Small Fraction of German Companies Expect Improvement in Their Operations by 2025 - ifo

According to a survey conducted by the Ifo Institute, a small portion of companies in Germany expects their business to improve next year, while more than half anticipate no change in their circumstances.

The Ifo survey indicates that only 12.6% of companies expect their business to improve in the coming year. Conversely, around one-third (31.3%) expects their economic situation to worsen in 2025. The majority (56.1%) believes that there will be no change in their economic circumstances in 2025.

Klaus Wohlrabe, head of Ifo surveys, remarked, "Companies currently see no signs of economic recovery. Given that the economy is already performing poorly in 2024, these figures are concerning." Wohlrabe highlighted that "No sector is truly optimistic about 2025. The new German government has a lot of expectations to meet," emphasizing that the construction sector is particularly pessimistic for 2025. In the construction sector, one in two companies thinks that business will decline. Less than 5% believes that conditions will improve next year. Sentiment in the retail sector is similar, with 42.1% of companies fearing that their business conditions will worsen. Only 7.9% are confident that their situation will improve, while half (50%) expects no change.

The outlook in the manufacturing sector is also stagnant. While 15.7% of manufacturing companies expect their business conditions to improve next year, 31.8% anticipate a decline. The majority (52.6%) expects no change in the trend. The service sector presents a slightly more optimistic picture; however, significant uncertainty remains. While 11.9% of companies in this sector expect improvement, 28.2% anticipate a deterioration. The majority of service providers (59.9%) expect no change in their economic situation.