German Economy Faces Severe Structural Crisis, Forecasts 0.1% Growth in 2025

The IW Institute reports stagnation across key sectors, rising unemployment, and political gridlock as major obstacles to recovery.

Germany's economy is projected to grow by only 0.1% in 2025, following two consecutive years of contraction, according to the IW Institute.
The service sector's stability is barely offsetting significant declines in the industrial and construction sectors, highlighting deep structural issues.
Unemployment is expected to rise to 6.2% in 2025, with continued declines in overall employment and weak private consumption dampening domestic demand.
Geopolitical tensions and the prospect of U.S. trade policies under Donald Trump are predicted to further harm Germany's export-driven economy and investment climate.
Political uncertainty in Germany, marked by a government vacuum and stalled reforms, is exacerbating the economic stagnation and undermining investor confidence.