A recent survey of approximately 23,000 companies across all sectors, conducted by the German Chamber of Commerce and Industry (DIHK), revealed that over one-quarter of respondents reported "poor" business conditions, while 23% rated them as "good".

Businesses reported that the current operating environment is as challenging as during the Covid period. One-third of firms anticipate a deterioration in operations over the next 12 months, an 8 percentage point increase compared to a survey conducted earlier this year. Only 13% of respondents maintain an optimistic outlook.

Helena Melnikov, Chief Executive Officer of DIHK, stated that German businesses are caught in a dual crisis. She explained, "In addition to structural issues, there are now economic consequences stemming from the conflict in the middle east".

Workers at a BMW factory in Munich, Germany on 5/12/2023. Photo: Reuters

Concurrently, the Ifo Institute's export expectations index, released on 26/5, registered a decline to negative 5,5 points in may, down from negative 1,2 points in april. Timo Wollmershaeuser, Head of Forecasts at Ifo, noted that geopolitical instability remains elevated.

“Although export activities saw an improvement in Quarter I, the outlook ahead remains challenging,” he stated. The automotive sector's expectations have been significantly impacted. After four months of optimism, companies in this industry now anticipate a decrease in exports. The metal industry shares a similar sentiment.

According to the Ifo Institute, energy-intensive industries are experiencing pressure in the global market, potentially leading to reduced sales.

Germany's GDP in Quarter I, compared to the same period in 2025, surprisingly grew by 0,3%, surpassing expectations, as reported by the European Statistical Office (Eurostat). However, just as this positive outlook began to materialize, the Middle East conflict escalated at the end of february, contributing to the less favorable results of DIHK's latest survey.

Consequently, the DIHK has revised its growth forecast for Europe's leading economy this year down to 0,3%, a decrease from the 1% projection made in january. For 2025, the country's GDP is anticipated to grow by 0,2%, placing it among the slowest in the EU.

Phien An (according to Reuters, Ifo)