Germany's ruling CDU party announced it will hold a leadership contest next month, in the wake of current party chair Annegret Kramp-Karrenbauer's shock announcement two weeks ago that she is stepping down.

The news comes after the party posted historically poor results in elections in the city of Hamburg at the weekend.

The CDU - the party of German Chancellor Angela Merkel - has been in turmoil for the past couple weeks, following Kramp-Karrenbauer's announcement. Her decision was widely seen as a reaction to the divisions within the conservative party about its ideological positions on issues such as immigration and whether it should cooperate at all on the local level with the far-right AfD party, something Kramp-Karrenbauer strongly opposed.

There are currently at least four people vying to be the party's next chancellor, replacing Merkel who has said she will step down when her current term ends next year.

"On April 25 we will hold a party congress. This party congress will last one day and take place here in Berlin," said Kramp-Karrenbauer, speaking after a leadership meeting at the party's headquarters. "At this party congress a new leader will be elected. This will also send a clear signal who will run for chancellor for the CDU."

Merkel stepped down as CDU party leader in December, 2018, although she stayed on as the head of the government.

The CDU's leadership crisis has left Europe's largest economy somewhat paralyzed by domestic questions. It's still not wholly certain that Merkel's coalition government can survive another year, something that will largely depend on who the party nominates to eventually replace her. A nominee with more right-wing policy positions than Merkel and Kramp-Karrenbauer could alienate the Social Democrats, the junior coalition partners.

The current situation was sparked by a local chapter's cooperation with the far-right AfD to try and bring down a left-wing coalition in the state of Thuringia, in defiance of Kramp-Karrenbauer and the party's central leadership.

However, with the AfD currently the second largest party in several states in the former East Germany, some conservatives argue that in order to fend off that threat, it's time to move away from Merkel's centrist brand of conservatism.

One CDU leadership candidate, former environment minister Norbert Roettgen, announced his intention to run last week, while three others are expected to officially announce their candidacies this week.