Just one in eight (12.6%) German companies expect business to be better next year, according to a new study by the ifo Institute.
Just under a third of companies (31.3%) expect their economic situation to deteriorate next year, while the majority (56.1%) expect their economic situation to remain unchanged.
“Companies are currently seeing no signs of an economic upturn,” commented Klaus Wohlrabe, head of surveys at ifo. “In view of the fact that the economy has already performed poorly in 2024, these figures are worrying.”
Construction sector
Noting that a “lot of work” awaits the new German government, Wohlrabe noted that the construction industry is particularly pessimistic about the coming year, with around half of companies expecting business to deteriorate, and just 5% believing that business will improve.
The outlook is similarly negative in the retail sector, where more than two fifths (42.1%) of firms believe that their situation will deteriorate, while only 7.9% are confident that things will get better. Half (50%) expect the situation to remain unchanged.
Among manufacturers, 15.7% expect an improvement in their business situation next year, while 31.8% foresee a decline. More than half (52.6%) anticipate no change.
Services sector more optimistic
The services sector offers a slightly more optimistic perspective, though here too, uncertainty remains high. While 11.9% of service providers expect business conditions to improve, 28.2% foresee a downturn, and a majority (59.9%) predict a stable outlook.
“No sector is really optimistic about 2025,” added Wohlrabe.
Last month, a separate study by the ifo Institute suggested that Germany’s economy is ‘floundering’, with the business sentiment index falling as the year drew to a close.
The ifo Business Climate Index fell in November 2024 to 85.7 points, down from 86.5 points in October, it said, largely driven by a worsening assessment of the current business situation. Business expectations also fell slightly among firms, as sentiment became ‘gloomier’, the ifo Institute said. Read more here.
