Janice R. Andrews
Berlin, Germany – January 30, 2025 – The German government has reduced its 2025 economic growth forecast to 0.3%, a significant drop from the 1.1% estimate made in October. The downgrade is primarily attributed to the collapse of the government in November, which disrupted key economic policies.
A report from the Economy Ministry indicates that Germany’s economic struggles will persist after two consecutive years of recession. Economy Minister Robert Habeck acknowledged the challenge, stating, “Germany is stuck in stagnation.”
Reasons Behind the Economic Slowdown
The breakdown of Chancellor Olaf Scholz’s coalition government last November led to political instability, delaying critical economic measures. The Social Democrats (SPD) and the Greens clashed with the Free Democratic Party (FDP) over budget disagreements, triggering further uncertainty.
Additionally, the return of Donald Trump as US President has raised concerns about potential shifts in US trade policy, which could impact Germany’s export-driven economy.
Public Perception and Economic Prospects
Despite the revised outlook, a survey by Union Investment revealed that 53% of respondents expect their financial situation to remain steady, while 30% anticipate improvement in the next year.
With Germany’s federal elections approaching on February 23, the nation awaits new leadership and economic strategies to navigate the uncertain future.
