📈 Germany Set for Economic Growth in 2025 After Two Years of Contraction

After two years of economic contraction, Germany is forecast to return to growth in 2025, with leading economic institutes upgrading their outlooks on the back of improved quarterly performance and new government policies. According to the Kiel Institute for the World Economy (IfW), Germany's GDP is now expected to grow by 0.3% in 2025, a notable upgrade from its earlier forecast of zero growth. This shift follows a stronger-than-expected 0.4% expansion in Q1 2025, signaling that the economy may have reached a turning point. Other key forecasts include: - Ifo Institute: Forecast revised to 0.3% growth in 2025 (up from 0.2%), with 1.5% growth in 2026 (previously 0.8%). - RWI (Leibniz Institute for Economic Research): 0.3% in 2025, rising to 1.5% in 2026. - IWH (Halle Institute for Economic Research): 0.4% in 2025, followed by 1.1% in 2026, both higher than prior projections. Economists point to a combination of fiscal stimulus from the new German government, stabilizing consumer sentiment, and gradual industrial recovery as driving factors behind the renewed optimism. However, they also highlight external risks, including global trade tensions and geopolitical uncertainty, which could still weigh on the short-term outlook.