OECD warns stronger economic impulses - federal government under pressure!

OECD warns stronger economic impulses - federal government under pressure!

The OECD has published its latest economic report for Germany, which was presented in Berlin on June 12, 2025. OECD general secretary Cormann presented the report to Federal Minister of Economics Reiche. A central topic of report is the increase in economic growth. The OECD offers concrete recommendations to promote this growth, which was sincerely welcomed by Minister Reiche. She emphasized the need for growth, especially after a phase of recession and stagnation.

The OECD assessed the current economic situation more optimistic than the federal government. This is particularly due to signs of economic recovery that arouses tangible hopes for a turn in business events. An elementary component of the proposed measures are tax relief and investment incentives, including an investment booster and the reduction in corporation tax.

recommendations for growth promotion

The other proposals include benefits for retained profits in personnel companies, tax advantages for electric cars and improved research funding. In addition, the federal government plans measures to reduce energy prices and a new relief package to further consolidate economic stability.

The OECD also warns for caution and indicates risks that can arise from the US customs policy for the export -oriented German economy. In addition, the report calls for more coordinating regional and industrial policy measures. The subdued municipal investment activity must be approached in order to promote economic development on site.

forecasts and assessments

Despite the optimistic signs, three well-known facilities, including the OECD and the IFO Institute, have corrected their economic forecasts for Germany downwards. For 2025, growth of gross domestic product (GDP) is forecast by only 0.4 percent, which was almost halved compared to a previous estimate of 0.7 percent. The growth forecast was also reduced from 1.2 to 1.1 percent for 2026.

The decline is partially justified by the fact that no financial package for defense and infrastructure has been taken into account in the new forecasts. Experts believe that this package could have significant effects on economic growth. While the implementation could take time, public investments would potentially increase and private investments would be stimulated.

Overall, it continues to emphasize that Germany can afford the financial package, since the debt ratio is lower than in many other OECD countries. However, structural reforms are necessary to create the financial scope for future debt repayments. Despite the planned investment offensive, the Federal Ministry of Economics sees the economic weakness as continuing, especially in the face of high political uncertainties.

The Global growth forecast of the OECD was reduced to 3.1 percent for 2025, which is due to higher trade barriers in G20 people economies and increasing geopolitical uncertainty. In view of these trends, the economic situation in Germany remains tense, but optimism is spreading due to the current reform proposals.