Economy
IW business administration researcher expect recession due to a customs dispute
When it comes to economic development, the research institute of the German economy is pessimistic. The experts expect a decline for 2025. Your hope is resting on the new federal government.
According to a new IW economic forecast, the German economy is shrinking by 0.2 percent. Germany suffered particularly from the consequences of the customs conflict called by the US government, the employer-based institute of the German economy (IW) in Cologne justified its assessment.
Worldwide uncertainties and persistently low investments also played a role. In addition, the location costs in Germany are high. Many Germans also remain careful with larger purchases. “The country remains in the recession,” said the IW. As early as 2024, the gross domestic product had dropped by 0.2 percent.
IW: The greatest risk of global economy is US trade policy
According to the IW, the greatest risk of the global economy this year is in US trade policy. Without the US customs policy, global economic strength in 2025 would be up to 0.8 percent higher, according to the economic researcher.
“International uncertainty” also plays a role. She holds many companies from investing. “Above all, larger purchases such as new machines and vehicles decrease.”
Researchers see dark location in industry and construction
The situation in industry and construction is particularly dark. “After three percent in 2024, industrial companies will also achieve less added value this year than in the previous year – high energy prices, rising wages and many regulations.” According to losses of 3.7 percent in 2024, construction companies would also have to accept 2025 further restrictions. The economy also braked high construction costs due to regulations.
According to IW, the development has now also arrived on the job market. So the number of employed people have been shrinking since mid -2024. “In summer there should be three million unemployed nationwide – there was last in 2010.”
Institute considers trend reversal possible
“The new government is now in its hands,” said IW economic chief Michael Grömling. A trend reversal is possible and overdue. In this way, the special infrastructure assets could boost the economy if it is called up with fast planning procedures.
dpa
Source: Stern
