The engine of its economy is underpowered. Hopes for a “takeoff” in 2026 are proving false. The anemic index of +0.2% in 2025 and the recession of previous years lead to the opposite of the original conclusion.
As Economy Minister Katerina Reiche announced on Wednesday afternoon in Berlin, the government of the Christian Democrat Friedrich Merz is currently revising the forecast for economic growth from 1.3% to 1%.
Long road to recovery
It is even noted that the independent Council of Experts on the German Economy (the so-called “Five Wise Men”) considers a forecast of 0.9% more realistic. “The road to economic recovery is long,” concludes Berlin’s Tagesspiegel newspaper.
Structural interventions 6 points
The finance minister is attempting structural interventions in the economy and is presenting a “six-point plan” in 2026 that will correct the bad words. These interventions are:
– Fighting red tape and simplifying legislation,
– investment in critical infrastructure,
– incentives to promote innovation,
– ensuring the energy supply,
– reforms in the social security system,
– diversification in the search for international alliances.
“We’ve heard it before…”
“Development is there, but at a very slow pace,” points out the head of the German Chamber of Industry and Commerce (DIHK), Elena Melnikov. For her part, Tania Genner, president of the Association of German Industries, estimates that “the expected recovery of the economy is minimal and extremely fragile.”
In higher tones, the assessment by Ulrich Reich, economic commentator of the television networks RTL/n-tv. “We have heard a lot about what we owe and what we plan to do, but we have heard this before, the issue is what is done in practice,” says the German analyst.
Government investment is a driver of growth
According to the Minister of Economy, two-thirds of the growth index for 2026 is due to government investments, which have been financed with new borrowing. For 2026, the central government’s new borrowing amounts to 98 billion euros. Now the 1.3% growth target is being pushed back to 2027, a year in which it is hoped the private sector will make better use of the “yeast” of government funding.
However, if the anemic growth indicators are maintained, Chancellor Mertz risks losing the political bet of the entire four years. It is known that the government has committed to reducing the tax burden on middle and low incomes “in the middle of the parliamentary term”. In addition, he has promised to cut corporate taxes from 2028, but only “if fiscal space allows”.
Sources: dpa, n-tv, ARD, DW
