Nonetheless, the survey pointed to a reluctance of SMEs to invest, as half of them invested no more than 5.4 percent of their turnover in their business in 2025 due to high energy and material prices and higher wage burdens.

FRANKFURT, Oct. 23 (Xinhua) -- Small- and Medium-Sized Enterprises (SMEs) in Germany turned out to be resilient and posted modest growth in profitability in 2025 in spite of prevailing challenges, a study published on Thursday showed.

German SMEs generated an aggregate turnover of 5.3 trillion euros (about 5.9 trillion U.S. dollars) in 2025, up by 1.5 percent year-on-year and profit margins climbed by 0.5 percentage points to 7.5 percent on average, according to a survey conducted by the KfW Development Bank.

The result is a sign that the German SMEs are "well-positioned" to drive forward the economic recovery in the country, said the bank in a press release.

The findings of the survey also showed that German SMEs in 2025 became more financially resilient to buffer potential shockwaves with an improved equity ratio. The share of SMEs with an equity ratio higher than 30 percent grew by 1.5 percentage points to more than 51 percent, while the share of SMEs with an equity ratio below ten percent fell to under 24 percent from over 28 percent in 2024.

The strong financial position should, according to KfW chief economist Dirk Schumacher, enable them to invest in the future.

Nonetheless, the survey pointed to a reluctance of SMEs to invest, as half of them invested no more than 5.4 percent of their turnover in their business in 2025 due to high energy and material prices and higher wage burdens.

To sum up the challenges German SMEs are facing, a report published by a British consulting company, RSM Ebner Stolz, concluded that "the economic conditions facing Germany's SME sector have changed fundamentally in recent years."

Global geopolitical tensions tightened, and U.S. trade policies became erratic, weighing on the exports on which German SMEs relied heavily. Meanwhile, surging energy prices and declining competitiveness have eroded the attractiveness of Germany as a destination for investment.

German SMEs are hit "particularly hard", said the "SME Diagnosis 2025" report published by the German Savings Banks Association.

The German SMEs are at "a turning point," and transformation and international business have become decisive for long-term competitiveness, said the report.