Anticipated expansion in Germany's electrical sector expected by 2025
The German electrical industry, a key player in the country's economy, experienced a significant contraction in 2024 due to several challenging factors. According to Gunther Kegel, President of ZVEI, the industry's turnover shrank by more than seven percent last year [1].
The contraction was primarily attributed to high material costs, weak external demand, and a decline in building permits, which impacted related sectors such as construction and manufacturing [2][3]. The construction industry, closely linked to electrical installations, saw a 1.8% decline in real terms in 2024, with the total number of building permits falling by 11.5% year-on-year [2]. Additionally, several energy-intensive industrial outputs and manufacturing sectors showed mixed to negative trends, taking a toll on the overall industrial activity and impacting electrical equipment demand [3][4].
However, despite the challenges of 2024, there are signs of hope for the future. Gunther Kegel anticipates a return to growth for the German electrical industry by 2025 [1]. This optimism is based on the improving industrial production, particularly in the automotive and energy sectors, which showed a 1.2% rise in May 2025 [3].
Looking ahead, the manufacturing PMI for Germany in mid-2025 hovered just below the expansion threshold, signalling ongoing contraction but with an expected rebound to 50.0 by late 2025, suggesting marginal improvement in manufacturing conditions, including those in the electrical industry [4].
Moreover, the renewable energy segment in Germany, a significant part of the electrical industry, is projected to grow robustly. According to recent reports, this segment is expected to grow with a compound annual growth rate (CAGR) of around 7.27% through 2032 [1]. This growth is driven by supportive government policies, cost declines in renewable technologies, and environmental concerns boosting demand for renewable energy solutions, including electrical equipment related to this sector [1].
In conclusion, while the electrical industry faced contraction pressures in 2024, there are signs of gradual recovery and significant growth opportunities, particularly linked to renewable energy developments, in the near term. This positive outlook for the renewable energy market segment is likely to have a positive influence on the electrical industry by 2025 and beyond.
The contraction in the German electrical industry was also influenced by challenges in the energy sector, as several energy-intensive industrial outputs and manufacturing sectors showed mixed to negative trends in 2024. However, with the renewable energy segment in Germany projected to grow robustly, anticipating a compound annual growth rate (CAGR) of around 7.27% through 2032, there's optimism for a recovery in the electrical industry, particularly in its relation to renewable energy developments, by 2025 and beyond.
