Frankfurt (Germany), May 21 (LaPresse) – The German economy continues to stagnate, and this situation is unlikely to change in the short term, even under the new federal government. The German Council of Economic Experts has downgraded its economic outlook for this year and now projects zero growth for 2025. Last autumn, the Council had forecasted 0.4% growth. The German economy remains in a "phase of marked weakness," the five-member committee announced in Berlin. In 2026, the economy may recover somewhat, with projected growth of 1%. However, experts believe there is no certainty that Germany will return to sustained economic success in the medium to long term.
After two consecutive years of recession, former Economy Minister Robert Habeck had already downgraded the government’s forecast a month ago, predicting GDP stagnation and 1.0% growth for 2026. According to the Council, bureaucratic hurdles and lengthy approval procedures are hampering growth. The unpredictable and erratic trade policy of U.S. President Donald Trump is also weighing on Germany’s export-oriented economy. According to the spring report, the resulting acceleration of structural change will affect even previously strong sectors and regions of Germany.
The economic weakness is also reflected in the labor market. According to the Federal Employment Agency, this year’s spring recovery was relatively weak in April. Economic experts expect the unemployment rate to rise to 6.2% in 2025. Inflation is forecast to decline slightly this year and next, averaging 2.1% in 2025 and 2.0% in 2026. However, economist Veronika Grimm cautioned that this forecast remains "highly uncertain." Trade conflicts could push prices either up or down, and the German government's large spending programs could also stimulate domestic demand and drive prices higher.
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