The German economy is currently in a slump, but massive investment plans look set to change that. The country's economy is forecast to grow by 1.5 percent next year, according to a new forecast from the economic think tank Ifo Institute.
That's almost double the latest forecast, which estimated that the German economy would grow by 0.8 percent next year. Germany was hit by negative growth in both 2023 and 2024, while economic experts have so far believed that the economy would stagnate in 2025.
- The crisis in the German economy reached its lowest point in the winter, says Timo Wollmershäuser, a senior economist at Ifo, according to the news agency Reuters.
The Ifo Institute's new forecast is a result of Germany's plans to boost the economy by massively increasing public investment.
The plans include tax breaks for businesses, and it has become possible to increase investment in defense and infrastructure after the decision to relax the so-called debt brake.
The debt brake, which set a limit on public investment, was relaxed in March after votes in the German parliament and the Federal Council, which represents the German states.
The German government is is currently preparing its draft budget for 2025. The budget is scheduled to be approved on June 25.
The OECD also published a forecast for the German economy a few days ago. It is believed that Germany's economy will grow by 1.2 percent next year. Here too, the country's growth package is the explanation for the brighter future prospects.
/ritzau/
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