By Maria Martinez
BERLIN (Reuters) -Five leading German economic institutes nudged their 2025 growth forecast for Europe’s largest economy up to 0.2% on Thursday, confirming a report from Reuters earlier this week.
The institutes had predicted 0.1% growth this year and 1.3% next year in their previous April forecast.
Plans by the new government to sharply increase spending on infrastructure and defence are expected to prop up growth in the longer term, but the economy will struggle for now, buffeted by the U.S. administration’s global trade war.
SPENDING SPREE TO SUPPORT GROWTH IN 2026
For next year, the institutes kept their forecast of 1.3% growth, as government spending should help the economy gain momentum.
The forecasts include for the first time a prediction for 2027, when the economy should expand by 1.4%.
“The German economy is still on shaky ground,” said Geraldine Dany-Knedlik, from the German Institute for Economic Research DIW Berlin.
“It will recover noticeably in the next two years. However, given ongoing structural weaknesses, this momentum will not last.”
German Chancellor Friedrich Merz took office in May promising to revive stagnant growth.
While it was clear that his promised rise in public spending would take time to benefit the economy, there is a growing sense that the promised reforms are slower and less far-reaching than initially expected.
(Reporting by Maria Martinez, Editing by Miranda Murray)
Comments