The IFO Institute has reduced its forecast for the development of the German economy in the current year for growth of 0.2 percent. In winter, the Munich economic researchers had assumed that an increase of 0.4 percent. It was not until 2026 that Ifo-Expert did: at 0.8 percent again, a little more potential. All values relate to the price -adjusted gross domestic product.
“The German economy is stuck. In particular, industry suffers from weak demand and increasing international competitive pressure.
It could come better
However, the current forecast does not yet include the current plans of the expected future government, as Wollmerhäuser explained. On the one hand, these are not yet decided, on the other hand, you don’t know enough about the exact design. However, if they are implemented well, there are clear potential. Above all, the coming, possibly also this year, the growth could then be higher than is currently predicted.
Union and SPD had agreed several changes in the basic law with the Greens. On the one hand, the goal is to relax the debt brake to enable higher defense spending. On the other hand, a special fund, which is 500 billion euros, financed by debts, is anchored for investments in infrastructure and climate neutrality in the Basic Law.
In December, the IFO also called an alternative scenario in its forecast, which in the event of the right political course for 2025 had predicted growth of 1.1 percent and for 2026 of 1.6 percent.
“Erratic and Protectionist Economic Policy” of the United States
But it could also come worse: political uncertainties, both in Germany and in the United States, caused considerable risks, the IFO said. “The new US government has taken on an erratic and protectionist economic policy.
Wollmerhäuser called on politics to quickly overcome this phase of uncertainty. “A reliable economic policy is essential to create trust and boost investments,” he emphasized. “The companies need planning security, especially in view of the current challenges through structural change in industry.”
Inflation expected at 2.3 percent.
The IFO expects the unemployment rate for the current year to 6.2 percent. This is minimally worse than in the last forecast. 6.0 percent are predicted for 2026.
In inflation, the Munich economic researchers are based – as in winter – from 2.3 percent in the current year and 2.0 percent in the coming year.