The German government has reduced its 2025 growth forecast to 0.3%, down from 1.1%, citing continued economic struggles, according to the newspaper Handelsblatt. The Economy Ministry declined to comment on the report.
Germany's economy, the largest in Europe, contracted for a second consecutive year in 2024, shrinking by 0.2% annually due to high energy costs, elevated interest rates, foreign competition, and uncertain business prospects. After adjustment for price effects, the whole economy's gross value added fell by 0.4% in 2024, with significant differences in the performance of individual economic sectors.
Disputes over how to revive growth led to the collapse of Chancellor Olaf Scholz's three-party coalition last year. With a national election on Feb. 23, economic concerns rank as the top priority for German voters.
The previous prediction in October of 1.1% growth by the Economy Ministry had already been thrown into doubt. In December, leading economic forecasters predicted growth between 0% and 0.4% for 2025 without rapid structural reforms. Handelsblatt also said that the government has also revised its 2026 growth forecast to just over 1%, down from 1.6%.