Overview

• The German Council of Economic Experts revised its 2025 growth forecast to zero, down from 0.4% predicted in November 2024, citing a 'pronounced phase of weakness.'
• U.S. tariffs and trade uncertainties are major factors dragging on Germany's export-driven economy, which has struggled with industrial slowdowns and competition from China.
• Germany has not seen economic growth in the past two years, making it the only G7 economy to experience such stagnation during this period.
• A €500 billion fiscal stimulus package, approved in March, aims to modernize infrastructure and defense, with economists projecting a 1% GDP growth in 2026 as the package takes effect.
• New Chancellor Friedrich Merz's government has pledged reforms, including cutting bureaucracy, advancing digitalization, and promoting European trade agreements, to spur long-term growth.