Background and Causes
The German government has adjusted its economic forecast for the year 2025, now expecting economic stagnation instead of the previously projected growth of 0.3%. This development is part of a larger economic challenge, as the German economy has already experienced a recession in 2023 and 2024. Stagnation in 2025 would mean the third consecutive year without growth.
Economic Challenges: The German economy faces several challenges, including weak foreign demand and increased economic uncertainty due to global events such as US tariff policies. These factors put significant pressure on the export-driven German economy.
International Influences: The International Monetary Fund (IMF) has also forecasted stagnation for Germany, while some economic research institutes predict minimal growth of 0.1%. The global economic conditions have deteriorated, hitting the German economy at a critical time when important economic policy decisions need to be made.
Impacts on Investors and Savers
The revised forecast could have significant implications for investment decisions. Investors and savers should prepare for a potentially prolonged period of economic stagnation, which could lead to more cautious investment strategies. Additionally, interest rates and overall economic uncertainty may affect investment returns.
Political Reactions
Politicians like Friedrich Merz are trying to spread confidence by pointing to the coalition agreement as a basis for economic improvements. The formation of a new government and the necessity for important economic policy decisions present a challenge to get the economy back on a growth path.