Germany, OECD lowers 2025 growth forecast mid Political uncertainty
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The OECD has downgraded Germany's 2025 growth forecast due to political uncertainties and tight fiscal policies, with a challenging economic outlook ahead.
OECD Lowers Germany's Growth Forecast for 2025
According to the latest OECD projections, Germany's economic growth in 2025 will be much more subdued than previously expected. The growth forecast has been revised down to 0.7% from 1.1%, driven by political uncertainty and the government's strict fiscal policies.
Economic Slowdown and Political Uncertainty
In the short term, Germany faces stagnation, with modest growth expected in 2024, followed by a further slowdown in 2025. The collapse of the governing coalition last month adds another layer of instability, raising concerns about future growth. Moreover, the victory of Donald Trump in the U.S. presidential elections may intensify fears of a trade war with the United States, one of Germany's key trading partners.
The Impact of the Coalition Crisis
Political uncertainty remains high following the failure to finalize discussions on the 2025 budget and the government crisis that has paralyzed action. The economic recovery plan that the government had planned, including measures to stimulate growth and employment, is now in jeopardy and will likely be postponed until the early elections scheduled for February 2025.
Germany to Underperform Compared to Eurozone Average
With a growth forecast below the Eurozone average, Germany is expected to see a 0.7% increase in GDP in 2025, while the Eurozone average is projected to be 1.3% in 2024 and 1.5% in 2025. As a result, Germany will face a period of slowdown compared to other European countries.
A Recovery Only in the Long Term
For 2026, however, the OECD expects a slight recovery, with German growth accelerating to 1.2%. Nevertheless, ongoing political uncertainty and the need to manage a high level of public debt may continue to weigh on Germany's growth potential in the coming years.
In summary, Germany is set to remain one of the weakest links in the European economy in the coming years, due to internal factors like political crisis and instability, as well as global challenges.
OECD Lowers Germany's Growth Forecast for 2025
According to the latest OECD projections, Germany's economic growth in 2025 will be much more subdued than previously expected. The growth forecast has been revised down to 0.7% from 1.1%, driven by political uncertainty and the government's strict fiscal policies.
Economic Slowdown and Political Uncertainty
In the short term, Germany faces stagnation, with modest growth expected in 2024, followed by a further slowdown in 2025. The collapse of the governing coalition last month adds another layer of instability, raising concerns about future growth. Moreover, the victory of Donald Trump in the U.S. presidential elections may intensify fears of a trade war with the United States, one of Germany's key trading partners.
The Impact of the Coalition Crisis
Political uncertainty remains high following the failure to finalize discussions on the 2025 budget and the government crisis that has paralyzed action. The economic recovery plan that the government had planned, including measures to stimulate growth and employment, is now in jeopardy and will likely be postponed until the early elections scheduled for February 2025.
Germany to Underperform Compared to Eurozone Average
With a growth forecast below the Eurozone average, Germany is expected to see a 0.7% increase in GDP in 2025, while the Eurozone average is projected to be 1.3% in 2024 and 1.5% in 2025. As a result, Germany will face a period of slowdown compared to other European countries.
A Recovery Only in the Long Term
For 2026, however, the OECD expects a slight recovery, with German growth accelerating to 1.2%. Nevertheless, ongoing political uncertainty and the need to manage a high level of public debt may continue to weigh on Germany's growth potential in the coming years.
In summary, Germany is set to remain one of the weakest links in the European economy in the coming years, due to internal factors like political crisis and instability, as well as global challenges.