Overview

• 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.