Economic Outlook Dims for Germany

The Munich-based Institute for Economic Research (Ifo) has significantly revised its forecast for Germany's economic growth in 2025, reducing it by 0.2 percentage points to a mere 0.2%. This adjustment reflects the ongoing challenges faced by the construction and manufacturing sectors, which remain in a deep recession.

Shifting Economic Dynamics

Despite the downturn in key sectors, there has been a notable expansion in the economic output of public service providers. Meanwhile, business and consumer-related services have shown a tendency to develop sideways, mirroring the overall economic trend.

Looking Ahead

For 2026, the gross domestic product growth is anticipated to rise to 0.8%. The unemployment rate is projected to slightly decrease to 6.2% in 2025 and further to 6% in 2026. On the inflation front, consumer prices are expected to increase by 2.3% this year, with a slight moderation to 2% in the following year.