Digital economy as a beacon of hope: Growth despite economic downturn - Germany's digital market ranks 4th in a global comparison

A glimmer of hope in the recession: The digital industry continues to grow

Germany faces major economic challenges. For the third year in a row, the nation is grappling with a recession that is negatively impacting numerous sectors. However, amidst this economic downturn, the digital economy is emerging as a bright spot and a driver of growth and innovation. According to the digital association Bitkom, the German IT and telecommunications (ICT) market is expected to see a 4.6 percent increase in revenue to €232.8 billion in 2025. ICT revenues already rose by 3.3 percent to €222.6 billion in 2024. This development underscores the relevance and resilience of the sector, which is increasingly becoming a central pillar of the German economy.

Alongside the increase in revenue, numerous new jobs are being created in the sector. According to Bitkom forecasts, the number of employees in the ICT sector is expected to grow by around 20,000 to 1.371 million by 2025. 9,000 new jobs were already created in 2024. Bitkom President Dr. Ralf Wintergerst emphasizes: “The digital economy offers a ray of hope in difficult times, increases revenue, and creates new jobs. The ICT sector is now Germany’s largest industrial employer. According to forecasts, most companies in the IT and telecommunications sector will perform well in 2025. The direction in IT is right.” At the same time, he demands: “Policymakers should do everything possible to accelerate this growth.”

Artificial intelligence: A boom with 43 percent growth

A key driver of growth is information technology, which continues to serve as the core of digital transformation. IT revenue in Germany is expected to rise to €158.5 billion in 2025, an increase of 5.9 percent. The software segment is particularly noteworthy, projected to grow by 9.8 percent to €51.1 billion. Here, the ongoing boom in artificial intelligence (AI) stands out: revenue from AI platforms, on which applications can be developed, trained, and operated, is expected to increase by an impressive 43 percent to €2.3 billion. Wintergerst sees enormous opportunities here and demands: "The next German government must seize this momentum and make Germany a leading AI nation."

Collaboration tools for mobile working and teamwork are also experiencing double-digit growth rates. These software solutions are growing by 12 percent to €1.4 billion. Security software, an increasingly critical area, is projected to see an 11 percent increase in revenue to €5.1 billion in 2025. Furthermore, the market for cloud services is expected to grow by 17 percent to €20 billion. Overall, revenues from IT services are rising by 5 percent to €53.8 billion, underscoring the growing importance of digital solutions across all sectors of the economy.

IT hardware: Infrastructure as a driver of growth

The IT hardware market is also proving robust. Forecasts for 2025 predict growth of 3.3 percent to €53.7 billion. The biggest growth driver is Infrastructure-as-a-Service (IaaS), i.e., rented server, network, and storage capacity. This segment is expected to grow by an impressive 24.4 percent to €6.2 billion.

Additional impetus comes from wearables, whose sales increased by 5.1 percent to €2.6 billion, and from mobile PCs, which saw growth of 4.5 percent to €6 billion. However, traditional consumer electronics continue its decline. Sales in this segment have shrunk for the fifth consecutive year, and are expected to fall by a further 7.5 percent to €7.2 billion in 2025. Wintergerst comments: “The consumer electronics business is suffering particularly badly in times of high inflation and economic uncertainty – many households are careful with their money and often forgo major purchases.”

Telecommunications: Investments in infrastructure are growing

The telecommunications market also remains on a growth trajectory. An increase of 1.8 percent to €74.3 billion is expected for 2025. The largest share is attributable to telecommunications services, which generate €53.5 billion in revenue, a rise of 1.4 percent. Investments in telecommunications infrastructure are increasing by 3.5 percent to €8 billion, while sales of end devices are rising by 2.7 percent to €12.8 billion. According to Wintergerst, "network operators are massively accelerating the expansion of gigabit networks and mobile communications.".

Overall, investments by ICT companies remain at a high level: 17 percent of companies plan to increase their investments in 2025, while 59 percent intend to maintain their current level. However, 23 percent of companies will have to reduce their investments. The focus is on software as well as research and development, in order to further strengthen the industry's innovative capacity.

International Perspectives: Germany's Digital Market Ranks 4th Worldwide

In a global comparison, Germany remains a significant player in the ICT market. However, with revenue growth of 4.6 percent, Germany lags behind other nations such as the USA (7.3 percent), India (8 percent), and the EU excluding Germany (7.1 percent). The global ICT market is projected to reach a volume of €5.2 trillion in 2025, an increase of 6.6 percent. The USA maintains its dominant position with a global market share of 38.8 percent, followed by China (11 percent) and Japan (4.6 percent). Germany shares fourth place with the UK, achieving a share of 4.1 percent. India is close behind with 2.5 percent.

Wintergerst emphasizes that despite its strong position in global comparison, Germany needs to do more to remain competitive. "It is crucial that the next federal government gets to work quickly after the elections and focuses on digital policy. We need less regulation and instead more investment and innovation."

Challenges and areas of action for the next federal government

The next German government faces the task of sustainably improving the framework conditions for the digital economy. Bitkom identifies four key areas for action:

1. Mobilizing capital and skilled workers: To boost the economy, more investment in companies and measures to combat the IT skills shortage are needed.
2. Digitization of public administration: More efficient state structures with modern registers and digital identities are essential.
3. Establishment of a Ministry of Digital Affairs – Wintergerst demands: “Real progress will only be achieved if there is a driving force for digital issues within the next federal government. The time is ripe for an independent Ministry of Digital Affairs.”
4. Strengthening digital sovereignty:* Germany must break free from one-sided dependencies and build its own expertise in key technologies such as microelectronics, IT and cybersecurity, AI, industrial metaverse and quantum computing.

Opportunities and Responsibilities

The digital economy remains a beacon of hope in difficult times, demonstrating that innovation and growth are possible even under adverse economic conditions. Germany has the opportunity to strengthen its position as one of the world's leading ICT markets, but must create the necessary political and structural conditions. The appeal to policymakers is clear: investment, innovation, and..

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Economic resilience and sales development

Germany's digital economy is defying economic turbulence and proving itself a stable growth driver. Despite the threat of recession for the third consecutive year, the digital association Bitkom forecasts a significant revenue increase of 4.6 percent for the information and communication technology (ICT) market in 2025. This would correspond to a total volume of €232.8 billion, following growth of 3.3 percent to €222.6 billion in 2024. These positive figures underscore the fundamental importance of digitalization for the economy and society.

Creating new jobs in difficult times

The digital economy not only contributes to increased revenue but also generates new jobs. According to Bitkom, around 20,000 additional jobs will be created in 2025, bringing the total number of employees to 1.371 million. An increase of 9,000 jobs was already recorded in 2024. Dr. Ralf Wintergerst, President of Bitkom, described the digital economy as a "ray of hope in difficult times" and pointed to the sector's positive business prospects. At the same time, he appealed to the German government to further promote the pace of growth through targeted measures.

Information technology as a growth engine of the ICT industry

Forecasts for the IT sector 2025

Within the ICT sector, information technology remains the most important growth driver. Revenue is projected to reach €158.5 billion in 2025, representing an increase of 5.9 percent. The software sector is particularly noteworthy, with an expected growth of 9.8 percent to €51.1 billion. The boom in artificial intelligence (AI) plays a central role in this growth. Revenue from AI platforms, used for the development and operation of AI applications, is projected to increase by an impressive 43 percent to €2.3 billion. Dr. Wintergerst emphasized that Germany must seize the opportunity to become a leading AI hub.

Other growth areas in information technology

Besides software development, other IT sectors are also showing strong growth. Collaboration tools that facilitate mobile working are expected to increase by 12 percent to 1.4 billion euros, while security software is projected to grow by 11 percent to 5.1 billion euros in light of rising cyber threats.

Cloud technology and IT services are on the rise

Ten percent growth in cloud services

Cloud services remain a rapidly growing segment. Revenue is expected to increase by 17 percent to €20 billion by 2025. These services enable companies to react flexibly and scalably to market changes. IT services overall – including consulting, implementation, and maintenance – are also projected to grow by 5.0 percent to €53.8 billion.

Growth in the IT hardware market

Positive development despite economic uncertainty

The IT hardware industry is also showing positive trends. Revenue growth of 3.3 percent to €53.7 billion is expected in 2025. The Infrastructure-as-a-Service (IaaS) segment is particularly noteworthy, projected to increase by 24.4 percent to €6.2 billion. Wearables, such as smartwatches and fitness trackers, as well as mobile PCs, remain relevant. Revenue from mobile PCs is expected to rise by 4.5 percent to €6 billion.

Decline in consumer electronics

The only downside remains the traditional consumer electronics sector, which has seen declining sales for the past five years. A decrease of 7.5 percent to 7.2 billion euros is expected for 2025, due to economic uncertainties and high inflation. Dr. Wintergerst explained that many households are foregoing major purchases.

Growth in the telecommunications sector

In the telecommunications sector, Bitkom expects growth of 1.8 percent to €74.3 billion in 2025. Telecommunications services will account for the largest share of this growth, at €53.5 billion, representing an increase of 1.4 percent. Encouragingly, investments in telecommunications infrastructure are expected to pick up again, rising by 3.5 percent to €8.0 billion. Revenues from end devices are also projected to increase by 2.7 percent to €12.8 billion. Dr. Wintergerst emphasized that network operators are significantly accelerating the expansion of gigabit networks and mobile communications. These investments are crucial for the future viability of digital infrastructure and form the basis for innovative applications and services.

Investments by ICT companies

Overall, investments by ICT companies remain high. Seventeen percent plan to increase their investments in 2025, while 59 percent intend to keep them constant. However, 23 percent of companies are forced to reduce their investments. These investments are primarily directed toward software and research and development, underscoring the importance of innovation for the sector. Despite the positive business outlook, not all companies will benefit equally from the projected market growth. In particular, small and medium-sized enterprises (SMEs) will only partially benefit from the general upswing, indicating structural challenges and differing competitive conditions.

A comparison of the global digital market

In a global comparison, Germany ranks fourth in the digital market. Global revenues from IT and telecommunications are expected to increase by 6.6 percent to €5.2 trillion in 2025. India is projected to experience the strongest growth at 8 percent, followed by the USA with a forecast of 7.3 percent. The EU (excluding Germany) is expected to achieve growth of 7.1 percent, while the UK is projected to see 6.7 percent and Japan 5.9 percent. China is forecast to experience revenue growth of 5.8 percent. With its projected growth of 4.6 percent, Germany is slightly below the global average.

Global market shares

The USA will continue to dominate the global market with a share of 38.8 percent in 2025. China (11.0 percent), Japan (4.6 percent), and Germany, which shares fourth place with the UK (both 4.1 percent), follow at a considerable distance. India will achieve a global market share of 2.5 percent. The EU, excluding Germany, will account for 9.9 percent of the global ICT market. These figures underscore the need for Germany to further intensify its efforts in the area of ​​digitalization in order to remain competitive internationally.

Demands on the future federal government

In light of these developments, Bitkom President Wintergerst called for a “restart” for Germany after the federal elections. He emphasized that the future federal government must quickly get to work and prioritize digital policy. Wintergerst advocated for less regulation and instead more investment and innovation. To stimulate the economy, he argued, it is necessary to mobilize more capital for companies and alleviate the shortage of IT professionals. He also called for an overhaul of government structures and the consistent digitalization of public administration with modern registers and digital identities.

Establishment of an independent Ministry of Digital Affairs

A key demand of Bitkom is the establishment of an independent Ministry for Digital Affairs in the next legislative period. Wintergerst argued that real progress can only be achieved if there is a central contact person and driving force for digital issues within the federal government. This ministry should concentrate on the core tasks and cross-cutting issues of digital policy and not be attached to another department.

Digital sovereignty of Germany

Furthermore, Wintergerst urged Germany to achieve greater digital sovereignty. He stressed the importance of reducing one-sided dependencies and developing domestic capabilities in key technologies such as microelectronics, IT and cybersecurity, AI, the industrial metaverse, and quantum computing in order to achieve a leading position in global markets. He appealed to the next federal government to demonstrate its willingness and ability to act, and to identify and address challenges in the digital sphere. Wintergerst emphasized that digital policy must become a priority in the upcoming legislative period to secure Germany's long-term competitiveness and fully exploit the potential of digitalization. The decisions made by the next government will be crucial in determining whether Germany can maintain and expand its position in global digital competition.

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