Germany needs reliable economic policy decisions to achieve sustained growth. The ifo Institute warns that without these policies, Germany’s growth could be left at just 0.4% in 2025 and may experience ‘creeping deindustrialization’. German businesses are struggling due to a lack of demand, high inflation, and falling orders from abroad.
Germany needs ‘reliable economic policy decisions,’ institute urges
Germany needs ‘reliable economic policy decisions’ to achieve sustained growth, according to a leading economic institute. The ifo Institute, based in Munich, suggests that policymakers can reduce uncertainty about the direction of the German economy by implementing policies such as:
If these decisions are not made, Germany’s growth could be left at just 0.4% in 2025, with a risk of ‘creeping deindustrialization’ where companies relocate production and investment abroad.
German businesses are struggling due to a lack of demand, as consumers continue to suffer from a loss of purchasing power following high inflation. Orders from abroad have also fallen despite a general economic recovery across the world.
If policymakers fail to act, there is a risk of structural changes away from industry and towards more services, which would hamper productivity, leading to temporary unemployment and growth remaining at 0.8% in 2026.
