Germany's Economic Slump: Can New Spending Spark Turnaround?
Update: 2026-01-05
Description
Germanys economy, Europes former powerhouse, is in a prolonged slump, with a projected growth rate of just 0.1% in 2023 and even weaker recovery expected in 2026. Higher energy costs and increased competition from China have exacerbated the situation. The new government plans to borrow up to one trillion euros for defense and infrastructure, but economists are skeptical about its effectiveness. The IFo Institute predicts a 0.8% growth rate for 2026, while independent experts warn of potential debt problems. The only potential bright spot is an additional 2.4 working days, which could add 0.3% to GDP. However, borrowing is set to reach 180 billion euros, pushing the deficit to 4.75% of GDP. The success of Germanys fiscal push to stimulate growth remains uncertain.
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