“The export industry is no longer the brake on the German economy – but it is also not yet its driving force,” said the head of economics at the fund company Union Investment, Michael Herzum. "Positive surprises are possible in the second half of the year - but an export boom is not." The Federal Association of Wholesale, Foreign Trade and Services (BGA) announced that there could not yet be any talk of a stable upswing in the German export economy. German foreign trade is showing resilience. Politicians must strengthen the location through fundamental reforms and relieve the burden on companies.
However, there are signs of an upturn in the coming months: strong European business and the AI boom mean that German exporters are looking to the future with more optimism than they have in four and a half years, according to the Ifo Institute. “The export economy is picking up speed,” said Ifo survey director Klaus Wohlrabe. For example, German technology is required in many areas for the construction of data centers.
VDMA warns of loss of research
However, a warning came from the mechanical engineering association VDMA. He warns against a migration of industrial research abroad. The association said 69 percent of the member companies surveyed said they would expand their research and development activities abroad. "This is a clear alarm signal for Germany as an industrial location - also because with 190,000 engineers we are the most important value creation partner for new products and processes in the economy," said VDMA deputy general manager Hartmut Rauen. The companies in mechanical engineering continued to invest at their headquarters in Germany. However, there are declines in sales and high location costs. The federal government must create the conditions for investment and innovation.
Things are going well in the electrical industry
While many industries are still waiting for a turnaround, the German electrical and digital industry is recording a strong increase in orders. In July, incoming orders were 32.6 percent higher than the previous year, said the industry association ZVEI. The development was driven by large domestic orders, which increased by 67.3 percent. But orders from foreign customers also increased by 8.6 percent, explained ZVEI chief economist Andreas Gontermann
According to the association, companies in the sector increased both their production and staffing plans in view of the booming business. In the coming quarter, more than a quarter of companies want to increase output. “In addition, hiring intentions turned positive again for the first time in more than three years,” explained Gontermann. At the end of the first half of 2026, there were 864,600 employees working in the German electrical and digital industry, 1.5 percent fewer than a year earlier.
According to the Ifo Institute, the business climate in the electrical industry rose to 16.0 points in August, the highest value since May 2023. In particular, expectations for future business were significantly more optimistic. “The electrical industry is currently one of the few areas of industry where business is going well,” explained Ifo expert Klaus Wohlrabe. Digitalization is the main reason behind the development. “The expansion of data centers, investments in artificial intelligence and automation in customer industries have a direct impact on the order books.” This is not a short-term flash in the pan.
Good chances for permanently higher economic growth
A study also confirms that Germany is in a generally good starting position despite the current economic crisis. According to the state development bank KfW, Germany has a good chance of sustainably higher economic growth. According to the study, potential growth of more than one percent annually can be achieved in the next decade.
Most recently, this fell from just under two percent in 2015 to just slightly above zero. The prerequisite for the turnaround is that Germany specifically strengthens the three growth forces of work, capital and productivity.
