German government cuts 2025 growth forecast to 0.3%- report

Investing.com — The German government has significantly reduced its growth forecast for the year 2025 to just 0.3%, a sharp decrease from the previous estimate of 1.1%.

This information was reported on Friday by the newspaper Handelsblatt, citing government sources.

The move comes in the wake of a sluggish economy that has failed to recover from two consecutive years of contraction.

In 2021, Germany’s economy, which is the largest in Europe, experienced a decrease for the second year in a row. The economic downturn was due to a variety of factors, including foreign competition, high energy prices, persistently high interest rates, and uncertain business conditions.

Official statistics released last week showed that the German economy contracted by 0.2% over the course of the full year.

The state of the economy played a major role in the breakdown of German Chancellor Olaf Scholz’s three-party coalition last year. Disagreements over strategies to stimulate the economy were a primary cause of the coalition’s collapse.

As the national elections approach on Feb. 23, the economy is the most pressing issue for German voters, according to polls.

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