Bouncing Back, But Central German Firms Aren't out of the Woods Yet
German businesses in the Central region anticipate a shifting market trajectory - German businesses anxiously anticipate a shift in trajectory
The vibe among businesses in central Germany, encompassing cities like Leipzig and Halle, barely budged compared to the previous year. According to Thomas Keindorf, president of the Halle Chamber of Crafts, there's still no sign of a reversal in the economic trend, similar to spring 2024. The industrial sector's business climate index clocked in at a mere 32.4 points, slightly above last year's 31, but a far cry from its 2018 peak of 89 points.
Kristian Kirpal, president of the Leipzig Chamber of Industry and Commerce, warned of sinking profits and increasing costspressure. "Investments remain rare. Apart from the lack of growth prospects, exorbitant location and labor costs, burdensome regulations, and hurdles hamper the appetite for investments," he added. The chambers are urging authorities to act swiftly by lowering energy costs, streamlining bureaucracy, and empowering job seekers.
While the Ifo Business Climate Index for Germany revealed a slight uptick in early 2025, the mood remained guarded. Global challenges loomed large, including trade tensions and economic uncertainty, which kept businesses on high alert, despite a tad higher confidence in investments.
The manufacturing sector faced challenges, while constructors' worries eased somewhat. The service and trade sectors, however, presented a more mixed picture, with the latter battling difficulties since the beginning of 2025. The calls to action from the Chambers of Commerce in Leipzig and Halle likely centered around support for businesses to navigate uncertainties, investment incentives, policies to combat trade disruptions, and proposals to drive innovation and digitalization.
With the business climate index still hovering around modest levels, central German companies might continue grappling with revenue and profit strains. Awaiting active measures from policymakers and better economic conditions, the recovery road for these firms will remain a long haul.
Businesses in central Germany, such as those in Leopzig and Halle, could benefit from vocational training programs, as this may help alleviate the burden of high labor costs and attract investments. However, to foster a conducive business environment, policymakers should address burdensome regulations, streamline bureaucracy, and lower energy costs, thereby creating a more appealing scenario for financial investments.
