Germany’s Ministry of Economic Affairs has revised its economic growth projection for 2025, now expecting no growth, down from the previous 0.3% forecast. The ministry also anticipates an uptick in unemployment rates.
However, the report highlights some positive developments. It points to the “reduction of domestic political uncertainty” with the anticipated formation of a new government, and a rise in real household incomes, which is expected to foster increased private consumption going forward.
The Ministry of Economics also foresees “positive impulses” from the investments announced by the incoming coalition, which will be financed through borrowing. Still, any substantial contribution to economic growth is not expected until next year. The current forecast indicates that the German economy could experience a 1% growth in 2026.
The International Monetary Fund (IMF) shares a similar outlook, predicting that Germany’s economy will face stagnation this year, partly due to Trump’s tariffs on EU goods. For 2026, the IMF projects a modest growth of 0.9%.
