Saturday, 15 March 2025
The German economy is facing significant challenges, with the federal government recently slashing its growth forecast for 2025 from 1.1% to just 0.3% in real terms. The decline is evident across industries, as nearly one in three German industrial companies is either relocating its research and development operations abroad or considering doing so. Meanwhile, Germany’s attractiveness as a production hub continues to diminish due to rising energy and labor costs, stringent regulations, and bureaucratic inefficiencies. These pressures are now also being felt in the logistics real estate market.
In late January, over 100 associations and businesses joined forces for “Economic Warning Day,” calling attention to the dire state of the economy. However, political responses have been muted. Meanwhile, the re-emergence of Donald Trump as a major political force in the U.S. introduces another disruptive factor. His threats of import tariffs and tax incentives to lure companies to the United States pose a serious risk to European industries, particularly those reliant on exports, such as mechanical engineering, automotive, and pharmaceuticals.
To counteract these threats, a comprehensive strategy is required—not just for Germany, but for all of Europe. Former Siemens CEO Joe Käser recently highlighted the problem, noting that while Europe is committed to doing the right things, it lacks focus, execution, and, most critically, speed. The solution must be a unified effort—what could be called a MEGA project: “Make Europe Great Again.”
Germany urgently needs an economic turnaround. However, standing strong against increasing competition from Asia and the U.S. will require more than isolated national efforts. Instead, a united European approach is essential to revitalizing the domestic economy and ensuring long-term economic stability.
Source: Analysis of the Current Economic Landscape by Kuno Neumeier, CEO of Logivest and Spokesperson for the Logistics Real Estate Theme Group at BVL
