Germany Lowers 2025 Growth Forecast Amid Political Shift

Germany has revised its economic growth forecast for 2025 to a mere 0.3%, down from the previous estimate of 1.1%. This adjustment follows the collapse of Chancellor Olaf Scholz's coalition government and two consecutive years of economic contraction. The government attributes the downgraded forecast to both domestic structural challenges and global uncertainties, including the return of Donald Trump to the US presidency and its implications for trade. Economy Minister Robert Habeck cites issues such as a lack of skilled labor, excessive bureaucracy, and low investment levels as contributing factors to the stagnation. Anticipation of the February 23 elections adds further uncertainty, impacting investment sentiment. Despite these challenges, there is cautious optimism that the German economy might rebound as inflation decreases and real incomes rise.