Economic Forecasts for Germany
The Ifo Institute, led by Clemens Fuest, has warned of a potential new global economic crisis. This warning comes at a time when the economic forecasts for Germany are already alarming.
- Growth Forecasts: The Ifo Institute expects economic growth of only 0.2 percent for 2025, while the OECD is slightly more optimistic at 0.4 percent. A growth of 0.8 percent is forecast for 2026.
- Weak Demand and Investment: The German economy is suffering from weak international demand and cautious investments by companies. The strong euro makes German exports more expensive and hampers sales abroad.
- Inflation and Purchasing Power: The inflation rate in Germany was 7.4 percent in March 2025, leading to a loss of purchasing power for consumers. The inflation rate is estimated to be about 2.4 percent for the year 2025.
Risks and Uncertainties
- US Economic Policy: The unpredictable economic policy of the USA, particularly the threats of tariffs, pose significant risks for the German export economy. Should the USA impose tariffs on European products, it would severely impact the German economy.
- Global Trade Tensions: The ongoing trade tensions, especially between the USA and other countries like China and Japan, are burdening global trade and could trigger a global recession.
Possible Effects of a Global Economic Crisis
- Markets and Investments: A global economic crisis would destabilize markets and negatively affect investments. This could lead to a decline in stock prices and a reduction in investment activity.
- Economic Stability: Economic stability in Germany and the Eurozone would be at risk. A crisis could lead to increased unemployment, declining incomes, and a decrease in consumption.
- Political Reactions: In a crisis, political reactions such as protectionism and tariffs could be intensified, further burdening trade.
Possible Countermeasures
- Government Spending and Investments: Planned government spending, such as the 500 billion euro investment package, could boost growth but also carries risks such as increasing debt and inflation.
- Monetary Policy Measures: Monetary easing could stabilize credit growth and support the economy.
In summary, the economic situation in Germany is tense, and the warning of a new global economic crisis underscores the need to be prepared for potential risks and to take appropriate measures to ensure economic stability.