German economy in crisis: forecasts for 2025 bleaker than ever!

German economy in crisis: forecasts for 2025 bleaker than ever!

The bleak future of the German economy is sealed: forecasts suggest that the country could only see minimal growth of 0.1 percent in 2025, after gross domestic product (GDP) has already shrunk by 0.2 percent this year. Experts from the German Economic Institute (IW) warn of a “structural economic crisis” that is causing serious problems for companies, particularly in the industrial and construction sectors. Private consumption also remains under pressure, although real incomes have increased, reports Mercury. The uncertainties caused by geopolitical tensions, including the impending trade conflicts with the USA, are contributing to the negative mood.

Crisis forecast and stagnation

The “economic wise men” have revised their growth forecast even further downwards and expect that the German economy could only grow by 0.4 percent next year. This is a dramatic decline compared to previous estimates and shows that the economy continues to suffer from cyclical and structural problems, as shown in the annual report. The uncertainty about the political situation, especially after the failed coalition in Germany, could also slow down further investments daily news reported. This situation could lead to a 0.1 percent decline in employment, while the unemployment rate could rise to up to 6.2 percent.

The recovery seems far away, as the international situation and higher inflation are also slowing companies' willingness to invest. The OECD has expressed similar concerns and only slightly raised the global growth forecast for 2025, further highlighting the already difficult situation for Germany. The federal government is being called upon to increase future-oriented public spending and make necessary market adjustments to get the economy back on track.