German Industrial Competitiveness on the Decline: Ifo Survey
Decline in Competitive Edge for German Industry: Latest Business Study Reveals Concerns - Industriousness survey: German companies experiencing a decline in competitive edge
The global market landscape is undergoing a shift, with trade disputes causing a stir, as per Klaus Wohlrabe, head of Ifo surveys. These turbulent waters are causing problems for Germany's industry. In April, a whopping 43.3% of companies within the metal production and processing sector reported a decline in competitiveness, a significant increase from the 37.8% recorded in January. In auto manufacturing, this number dropped from 42.5% to 33%, but it's still a concern.
Within the EU, fewer firms in Germany fear losing competitiveness, with the figure dropping from 20.9% in January to 13.4% in April.
What's Competitiveness?
Competitiveness is the ability of a company or country to outperform others in the global marketplace, thanks to factors like innovation, productivity, and cheap labor costs.
The State of Competitiveness in Germany
Recent surveys by Munich's Ifo Institute for Economic Research reveal a downward trend in the global market presence of German industry, with 24.4% of industrial companies reporting a decline in international competitiveness as of April 2025. The metal production and processing sector is greatly affected, with 43.3% of firms noting a decrease in competitiveness. Other industries like electrical and mechanical engineering and the automotive sector are also weakened.
Geopolitical Challenges
Klaus Wohlrabe attributes these challenges to, among other things, escalating trade disputes shaping the balance of power on global markets. This unpredictable geopolitical and trade policy environment poses difficulties for German firms looking to maintain their competitive edge internationally.
Economic Outlook and Export Expectations
The Ifo Institute reported a sharp fall in export expectations in April, down to -9.8 points, the lowest since May 2020, hinting at pessimism about future international sales. While some business sentiment indicators improved slightly, overall economic growth forecasts for Germany are bleak, with the Ifo Institute projecting only 0.2% growth in price-adjusted GDP for 2025.
Inflation, rising US tariffs on EU imports, and economic uncertainty all contribute to this pessimistic outlook for the German economy. Inflation is projected at 2.4% in 2025, which adds to economic headwinds affecting competitiveness.
Ifo Institute and Its Business Surveys
The Ifo Institute's Business Surveys, which are renowned worldwide, offer valuable insight into these economic changes and competitiveness trends, assisting businesses and policymakers in navigating this tough terrain.
In essence, the decline in the competitiveness of German industry, particularly in the metal production and processing sector, can be attributed to several factors, including global competition, trade disputes, rising uncertainty, subdued growth prospects, and inflationary pressures, as detailed in the Ifo Institute's recent surveys and analyses from 2025.
- The metal production and processing sector in Germany, as revealed by Ifo Institute's surveys, is deeply affected by the decline in competitiveness, with 43.3% of firms reporting a decrease in their competitiveness.
- The geopolitical challenges, such as escalating trade disputes shaping the balance of power on global markets, pose difficulties for German firms, according to Klaus Wohlrabe, head of Ifo surveys, making it harder for them to maintain their competitive edge internationally.
