Germany's dark economic outlook: only 0.4% growth 2025!

Germany's dark economic outlook: only 0.4% growth 2025!

The business forecasts for Germany remain dark. The OECD has maintained its estimate for the growth of the German gross domestic product (GDP) in 2025 and only expects an increase of 0.4 percent. This means a reduction in the previous forecast, which still provided for growth of 0.7 percent. Only Mexico is expected to do worse, with a forecast decline in GDP by 1.3 percent, while Germany only performs better than Norway and Austria compared to 50 nations examined. ZVW reports that commercial barriers and political uncertainties have increased in the past few months.

The OECD, an important association of western industrialized countries, also reduced global business forecasts in its analysis. For 2025, a global growth of 3.1 percent is expected, while growth in the euro area is forecast to 1.3 percent. The OECD chief economist Álvaro Pereira indicates the noticeable effects of weaker economic outlets worldwide and emphasizes that the uncertainties could also burden the consumer's trust. Tagesschau adds that experts nevertheless expect an increase in public investments and a possible deprivation of private investments through an upcoming financial package, but this has not yet been taken into account in the current forecasts.

economic challenges

The situation for the German market is particularly problematic. The Federal Ministry of Economics warns of persistent economic weaknesses that are shaped by high political uncertainties. Experts forecast a stagnation of the German economy for the current year. According to the IFO Institute, the price-adjusted GDP could only grow by 0.2 percent in 2025. At the same time, the effects of the increased prices that are related to the Ukraine conflict will continue to restrict the expenditure of consumers. This uncertainty means that many households hold their money back. RND emphasizes that a weak request also affects the economic activity in Germany.

For 2026, the growth forecast is slightly raised and growth of 1.2 percent is expected, but the fact remains that Germany is the bottom of the industrialized countries. However, the implementation of necessary structural reforms to improve the economic situation could take some time, which hinders the recovery process at short notice

FAZIT

Overall, the situation for the German economy remains tense. The challenges due to geopolitical uncertainties and increasing trade barriers require determined steps on the part of politics. Despite the slightly positive trends, the OECD expects that Germany has to struggle with minimal growth of 0.4 percent, which underlines the need for measures to stabilize and improve the economic framework.