Literally in the 11th hour I present my usual view into the German economy for MARCH 2025 (I promise, the April edition will be issued earlier in the month). But hey, t’s see and take a closer look on how Germany’s economy fared so far:
The German institute IfW forecasts a stalling German GDP for 2025 but a growth of up to 1.5% in 2026- due to the new debt-package (here, in German). The OECD has placed Germany at the bottom of growth expecations (here, in German), only Mexico shall fare worse in 2025. Moreover, the joint forecast by the leading economic institutes (here, in German) only assumes marginal growth of 0.1% in the German economy in 2025. The German Ministry of Economic Affairs published a rather sober report on the current state of the German economy (here, in German) and also Deutsche Bank Research issued a strong opinion on the growth potential of the German economy (here, in German). Interestingly, despite the declining economy, tax revenues are further increasing (here, in German).
The German DAX price index (for an explanation, why I prefer this index, cf. here), started at 8,866 points on 3rd March and then zig-zagged its way down to 8,489 points on 31st March 2025.
German industrial orders remained unchanged: after decreasing by -1.5% (MoM, but +5.7% YoY) in October and by -5.4% (MoM, -1.7% YoY) in November, increasing by +6.9% (MoM, -6.3% YoY) in December 2024, then crashing by -7.0% (MoM, -2.6% YoY) in January, orders remained unchanged (0.0% MoM, -0.2% YoY) in February 2025.
Germany’s industrial production decreased: after decreasing by -1,0% (MoM, even -4.5% YoY) in October, production gained +1.5% (MoM, -2.8% YoY) in November, before again decreasing by -2.4% (MoM, even -3.1% YoY) in December 2024, then gaining 2.0% (MoM, -1.6% YoY) in January and now – again – decreasing by -1.3% (MoM, even -4.0% YoY) in February 2025.
German exports, though, increased: after decreasing by -2.8% (MoM, -2.8% YoY) in October before increasing by +2.1% (MoM, but -3.5% YoY) in November and +2.9% (MoM, even +3.4% YoY) in December 2024, before again decreasing by -2.5% (MoM, -0.1% YoY) in January and now – again – increasing by 1.8% (MoM, +0.1% YoY) in February 2025. For other German KPI’s, I refer you, first, to the usual „Destatis Deutschland-Dashboard“ (here) and the „Data Commons (Germany)“ (here), but also to the new IWH Forecasting Dashboard and the DATEV Mittelstandsindex.
The German Target 2 balance lost around Euro 11 bn in March 2025 and ended at Euro 1,069 bn. The German inflation-rate decreased slightly: starting from its peak of 10.4% in October 2022, the rate decreased to finally 1.6% in September but has then re-increased to finally 2.6% in December 2024, before decreasing to 2.3% in January, where it remained in February, before further decreasing to 2.2% in March 2025 (each YoY).
The German Labor market does not really move at the beginning of spring: After declining to 5.9% in November and rising to 6.1% in December 2024, the unemployment-rate further rose to 6.4% in January where it remained in February and also in March 2025 (all MoM). There against, German insolvency filings now increased for 22 consecutive months in a row – but for the first time since June 2024 not in the double-digit range: After 3.1% in May, 13.9% in June, 23.8% in July, 13.8% in August, 19.5% in September, 22.4% in October, 18,8% in November and 12.3% in December 2023, 26.2% in January, 18.1% in February, 12.3% in March, 28.5% in April, 25.9% in May, a „mere“ 6.3% in June, 13.5% in July, 10.7% in August, 13.7% in September, 22.9% in October, 13.8% in December 2024, 14.1% in January, 12.1% in February and „only“ 5.7% in March 2025 (all YoY; cf. my then most recent comment, here, in German).
The leading German sentiment indicators were not in sync: The German (Industrial) Purchasing Managers’ Index (PMI) rose by another 1.8 (!) points to 48.3 points in March 2025. Also, the ZEW Indicator for business expectations rose by 25.6 points compared to February to 51.6 points in March 2025. The ifo Business Climate Index rose to 86.7 points in March, up from 85.3 points in February 2025. The GfK-consumer index, further decreased to -24.6 points in March 2025.
To sum up: While the pundits forecast a very meagre growth for Germany in 2025, and most „hard“ KPI did not budge or decline (except exports), the German labour market seems to be unphased by spring break, corporate insolvencies are on the decline and the sentiment indicators for the industry jump (the consumer-index less so). What to make out of this picture largely remains unclear. Without the tariff-shock hitting in April, one could think that the German economy wasn’t doing too bad. But we all know better.