Economic sentiment exhibits a marginal uptick - Economic retreat tapers somewhat.
Economic Sentiment in Southwest Germany Stabilizes Slightly
After showing signs of stabilization, the economy in the Southwest region, notably Baden-Württemberg, exhibits a promising improvement, according to a recent survey. While this is not a complete recovery, the Baden-Württemberg Chamber of Industry and Commerce (BWIHK) reported an increase in optimistic companies by two percentage points, making up 18% of the surveyed businesses, anticipating growth over the next 12 months. Simultaneously, the proportion of pessimistic companies has dropped from 29 to 24%.
Current business conditions remain challenging, with only 26% of companies generally rating their situation as good. In contrast, 22% still deem their situation as poor. The survey involved 3,676 companies of various sizes and industries from April 22 to May 13.
BWIHK President Jan Stefan Roell observed a slight improvement in the economic assessment but emphasized there is no talk of an upturn. He urged decisive action from the political sector. Companies, Roell stated, require tangible improvements to foster growth.
The cautious investment readiness of companies persists. Only 22% of investing businesses are planning to boost their expenditure in the next 12 months, with little difference compared to previous surveys. Around one-third of companies intend to reduce investments.
According to Roell, reliable and competitive framework conditions are essential for economic growth. Companies, he explained, invest where long-term stable prospects are visible—a statement that implies reduced regulation, quicker approval procedures, affordable energy, and a clear political commitment to industrial location Germany.
The surveyed companies identified weak domestic demand, rising labor costs, and geopolitical tensions as notable business risks. Construction, retail, and hospitality sectors are bearing the brunt of these challenges, while financial and consulting services are seen as potential growth areas.
While specific regional survey results for the Southwest are scant in the available sources, a broader look at the German trends implies a positive outlook for the region's economy. Sectors such as banking, export-oriented industries, and construction are expected to benefit most from current macroeconomic developments, with domestic demand also poised for recovery in the coming months.
[1] BWIHK (2025). Business Trend Indicator Baden-Württemberg April 2025. Retrieved from https://www.bwihk.de/unternehmen/wirtschafts_trend_indikator
[2] Destatis (2025). Consumer Price Index – Annual Rates. Retrieved from https://www.destatis.de/EN/Themes/NationalEconomyIndustry/PriceStatistics/RetailPriceIndex/ConsumerPriceIndexYearlyRates.html
[3] ZEW (2025). Indicator of Economic Sentiment Germany. Retrieved from https://www.zew.de/en/research/economic-research/indicators-forecasts/german-indicator-economic-sentiment
- Despite a slightly stabilized economic sentiment, the Baden-Württemberg Chamber of Industry and Commerce (BWIHK) emphasizes the need for tangible improvements in the employment policy to foster growth, as many companies are investing where long-term stable prospects are visible.
- The business risks identified by surveyed companies include weak domestic demand, rising labor costs, and geopolitical tensions, which could potentially impact employment policies in the finance and business sectors of the Southwest region.
