09\/25\/2025September 25, 2025Economists warn German growth plan needs structural reforms<\/p>\n
Germany’s leading economic institutes have said the government’s investment package will deliver only short-term gains unless paired with structural reforms.<\/p>\n
In their autumn report, the five institutes forecast economic growth<\/a> of 1.3% in 2026 and 1.4% in 2027. But they cautioned that “persistent structural weaknesses”\u00a0mean the momentum will not last, according to Geraldine Dany-Knedlik of the German Institute for Economic Research (DIW Berlin).<\/p>\n For 2025, the economists expect GDP to rise just 0.2%, “barely more than stagnating,”\u00a0Dany-Knedlik said, noting the slight upgrade from a 0.1% spring forecast reflecting revised data from previous years.<\/p>\n “A renewal of the German economy remains elusive and prospects for growth are continuing to deteriorate,” said Dany-Knedlik, as she presented updated growth projections conducted jointly by several institutes.<\/p>\n “Structural problems are merely being masked,” she said, warning that high costs, a gap in skills and diminishing competitiveness all threatened growth.<\/p>\n The report flagged “considerable risks”\u00a0for the economy, citing the potential for a US\u00a0trade dispute to escalate and uncertainty over the overall impact of expansive fiscal policy.<\/p>\n The institutes\u00a0warned that aggressive US\u00a0trade policy threatened\u00a0to drag down global growth.<\/p>\n “The US\u00a0tariff policy<\/a> casts long shadows over the world economy in autumn 2025,”\u00a0said economist Hannah Seidl of DIW Berlin, noting that while many countries and the EU have reached trade agreements with Washington, those deals “entrench a high tariff level.”<\/p>\n Speaking alongside Dany-Knedlik, Stefan Kooths of the Kiel Institute for the World Economy compared\u00a0the German economy to a drug\u00a0addict\u00a0who had just received a fix in the form of Merz’s promised billions.<\/p>\n