Economic crisis in Germany: Experts warn of new billion-dollar errors!

Economic crisis in Germany: Experts warn of new billion-dollar errors!

The current economic forecasts for Germany paint a bleak picture. According to the “Economists”, the German economy will remain without growth this year for the third time in a row. They estimate modest growth of just one percent for 2026, which highlights the challenges for the Federal Republic. The Minister of Economic Affairs describes the current economic crisis as the most stubborn and complicated in the history of the Federal Republic.

Inadequate crisis management is not enough in this critical situation; Rather, comprehensive structural changes are needed. Although the federal government is planning to spend billions, there are fears that this should not act like an economic stimulus program in order to avoid harmful side effects. The Council of Experts also expresses distrust in the new coalition and warns against inefficient use of funds.

Need for clear rules

In order to properly direct investments and prevent the reallocation of funds to state consumption, economists are calling for clear rules. The Advisory Council's statements suggest that solid formal rules may not be introduced, which is likely to lead to further delays. Experts warn urgently that without targeted investments to increase productivity and the necessary structural change, financial resources could simply disappear. This would in turn lead to an increasing debt ratio.

In addition, reference is made to internal differences of opinion within the Advisory Council. Professor Veronika Grimm in particular made her point of view clear in her special opinion on three key topics in the spring report, but her opinion is sometimes in conflict with the majority in the committee. These internal tensions mean that political confidence in the recommendations of the Council of Experts is currently low, which further exacerbates the worrying situation.

Current forecasts from the IMK

In addition to these doubts, the Institute for Macroeconomics and Business Cycle Research (IMK) analyzes Germany's short and medium-term economic development. The last forecast, published on March 21, 2025, predicts an annual average decline in gross domestic product (GDP) of 0.1% in 2025. A moderate decline of 0.6% is expected over the course of 2025. In the coming year 2026, however, GDP is forecast to increase by 1.7% on average, with an annual increase of 1.6%.

The challenges facing the German economy require urgent and targeted measures to set the course for positive development. Without committed and effective politics, doubts about a speedy economic recovery are more than justified. The coming months will be crucial for the direction Germany takes and whether the country is able to address the issues at hand.

For detailed information and a deeper insight into the forecasts and recommendations, please refer to the reporting by RND and the analyses IMK.