Economic forecast by the German Economic Institute predicts contraction of 0.2 per cent

According to the latest economic forecast in German language by the German Economic Institute (IW), the German economy will shrink by 0.2 percent this year. Experts attribute the ongoing recession to global uncertainty, which is putting many companies under pressure. In addition, there are likely to be around three million unemployed in Germany by the summer.

Everyone is growing except Germany

Although the eurozone will grow by 0.8 percent by the end of the year, the US by 1.3 percent and China by as much as four percent, GDP in Germany is now shrinking for the third year in a row – the location is increasingly being hampered by persistently low investment.

From the perspective of Cologne-based economists, US trade policy is the biggest risk to the global economy this year. According to IW calculations, global economic output would be up to 0.8 percent higher this year without US tariff policy.

Industry and construction take a hit

Following a decline of three percent in 2024, industrial companies will also see less value added in 2025 – high energy prices, rising wages and bureaucracy are weighing them down. Construction companies will have to accept further restrictions in 2025 after losses of 3.7 percent in 2024.

The special infrastructure fund could boost the economy – if it is accessed quickly through streamlined planning procedures. Companies are also suffering fro