German Industry Faces Investment Declines Amid Economic Crisis

German companies are significantly scaling back investment plans as the ongoing economic crisis deepens uncertainties across key sectors. According to a recent survey by the ifo Institute, the investment expectations index plummeted by 11.6 points to minus 9.2 in November 2025, indicating that more companies plan to reduce rather than increase their investments. Vehicle manufacturing experienced the steepest drop, with the index falling to minus 36.7 points, followed by the industrial sector at minus 17.3 points and the chemical industry at minus 9.4 points.

Ifo expert Lara Zarges highlighted that this reluctance to invest stems from structural transformation challenges, waning attractiveness of Germany as an industrial location, and lingering uncertainties regarding economic policy frameworks. Despite slightly improved outlooks for 2025, with the index projected to ease to minus 3.1 points, investment reductions are still forecast to outnumber increases.

The chemical industry is enduring a pronounced crisis; the German Chemical Industry Association (VCI) anticipates a 2.5% production decrease and a 3% reduction in revenue for 2025. This is attributed to severe order shortages alongside broader economic headwinds such as recession risks, loss of price competitiveness, tariffs, protectionism, and ongoing trade conflicts. Conversely, the pharmaceutical sector displays resilience, projecting a 3% increase in production and a 4.5% rise in revenue. However, this positive performance has not prevented job cuts in the chemical-pharmaceutical sector, with around 2,400 positions eliminated this year amid announced plant closures and production relocations.

These developments underscore the complex landscape German companies face as they navigate structural changes and economic instability, impacting investment decisions and employment within critical industrial branches.