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Merz: Prosperity for all” - But Germany remains at the bottom of the list in terms of growth!
Chancellor Merz predicts weak economic growth in Germany for 2025 and talks about challenges and possible solutions.
Merz: Prosperity for all” - But Germany remains at the bottom of the list in terms of growth!
Chancellor Friedrich Merz expressed optimism about Germany's economic situation and expects medium-term growth of around two percent. This was part of his speech in the Bundestag, in which he established the slogan “Germany is back” and noted that the new federal government's plans are aimed at “prosperity for all”. However, Merz also faces numerous challenges that stand in the way of German growth.
There is considerable skepticism among economists. Critics point out that Merz's forecasts may not be realistic. A central point of the discussion is the lack of investment and skilled workers in Germany. Demographic change in particular, with baby boomers retiring, is exacerbating the problem of a shortage of skilled workers. Economist Carsten Brzeski also emphasizes that the targeted two percent growth will be difficult to achieve in the coming years.
Economic framework conditions
Despite an increase in industrial orders, the general economic situation remains stagnant. Germany has the lowest growth forecast among developed countries. According to the OECD, the forecast for 2025 has been halved to just 0.4 percent; This means that Germany only has Mexico among the G20 countries that performs even worse. High energy prices, a weakening industry, bureaucracy and ongoing uncertainties in exports are putting a significant strain on the economy.
The OECD also states that the burden of the automotive crisis, politics in the USA and ongoing consumer uncertainty should not be underestimated. These factors are also reflected in the lowered growth forecasts: The Ifo Institute only expects growth of 0.2 percent for 2025, while the DIW expects stagnation.
Political measures and future outlook
Merz and the new government have announced that they will make extensive investments in defense and infrastructure worth over one trillion euros. However, these measures are only expected to have positive effects in the medium term. Economic researchers do not expect “positive impulses” until around 2026. In particular, the planned spending packages could have a significant impact on the economy in 2026, although here too there are many uncertainties regarding planning capacities and the availability of labor.
In summary, Merz's optimistic assessments must be combined with a realistic discussion of the difficulties facing the German economy. The possibility of sustainable growth depends crucially on the successful implementation of the planned political measures and a certain stabilization of the international framework conditions.