Joint Economic Forecast Autumn 2025: Fiscal stimulus masks structural weakness
Key Forecast Figures for Germany
The German government is using expanded debt rules to strengthen defense capabilities and invest in infrastructure and climate protection. This will provide stimulus in the coming years, but with limitations: first, funds for construction and defense projects, for example, are being disbursed more slowly than budgeted due to long planning and procurement times. Second, loans are also being used to avoid consolidation that is actually due. Third, despite the deferred funds from the expanded borrowing options, there will be a considerable need for consolidation in 2027.
Nevertheless, the domestic economy is picking up speed noticeably, but the structural problems are only being concealed: fundamental reforms to strengthen the economy are not being implemented. The outlook is deteriorating, which is also reflected in the expected decline in growth rates of production potential. High energy and unit labour costs by international standards, a shortage of skilled workers, and a further decline in competitiveness continue to dampen long-term growth prospects.
While the service sectors, particularly in the public sector, will grow strongly over the next two years, the recovery in the manufacturing sector is likely to be modest. Foreign demand for German goods is weakening in particular due to declining competitiveness and higher tariffs. As a result, strong growth in ex-ports will not be a driving force in the coming upturn. Supported by expansionary fiscal policy, the recovery is concentrated on the domestic economy.
The economic upturn is also likely to bring about a noticeable improvement in the labour market. Together with rising real disposable incomes, this will boost private consumption and thus consumer-related services. Consumer prices are expected to rise by a good 2% during the forecast period.
Overall, economic development in Germany is exposed to considerable risks: the trade dispute between the US and the EU has great potential for escalation, especially if EU commitments cannot be met. In addition, the macroeconomic impact of expansionary fiscal policy is difficult to assess and depends heavily on the specific design of the policy.
Germany is at an economic turning point, as growth prospects are deteriorating rapidly. To provide guidance, the institutes present a twelve-point economic policy compass. If these reforms were implemented promptly, this would not only strengthen the long-term growth potential of the German economy but also stimulate it in the short term.
The full report will be available on 25 September 2025 at 10:00 a.m. at www.gemeinschaftsdiagnose.de/category/gutachten/.
About the Joint Economic Forecast
The Joint Economic Forecast is published twice a year on behalf of the Federal Ministry for Economic Affairs and Energy. The following institutes participated in the autumn report 2025:
- German Institute for Economic Research (DIW Berlin)
- ifo Institute – Leibniz Institute for Economic Research at the University of Munich in cooperation with the Austrian Institute of Economic Research (WIFO) Vienna
- Kiel Institute for the World Economy
- Halle Institute for Economic Research (IWH) – Member of the Leibniz Association
- RWI – Leibniz Institute for Economic Research in cooperation with the Institute for Advanced Studies Vienna
Scientific contacts
Dr Geraldine Dany-Knedlik
German Institute for Economic Research (DIW Berlin)
Tel +49 30 89789 486
gdanyknedlik@diw.de
Professor Dr Stefan Kooths
Kiel Institute for the World Economy
Tel +49 431 8814 579 or +49 30 2067 9664
Stefan.Kooths@kielinstitut.de
Professor Dr Timo Wollmershäuser
ifo Institute – Leibniz Institute for Economic Research at the University of Munich
Tel +49 89 9224 1406
Wollmershaeuser@ifo.de
Professor Dr Oliver Holtemöller
Halle Institute for Economic Research (IWH) – Member of the Leibniz Association
Tel +49 345 7753 800
Oliver.Holtemoeller@iwh-halle.de
Professor Dr Torsten Schmidt
RWI – Leibniz Institute for Economic Research
Tel +49 201 8149 287
Torsten.Schmidt@rwi-essen.de
Whom to contact
For Researchers
Vice President Department Head
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Head of Public Relations
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+49 345 7753-765 Request per E-MailRelated Publications
Expansive Finanzpolitik kaschiert Wachstumsschwäche
in: Dienstleistungsauftrag des Bundesministeriums für Wirtschaft und Energie, 2, 2025
Abstract
Deutschland befand sich in den vergangenen zwei Jahren in der Rezession. Die jüngst stark revidierten Volkswirtschaftlichen Gesamtrechnungen zeigen, dass die Krise deutlich ausgeprägter war als bislang ausgewiesen. Mit einer Stagnation in der ersten Hälfte dieses Jahres dürfte die deutsche Wirtschaft die konjunkturelle Talsohle erreicht haben. Eine breit angelegte Erholung ist allerdings nicht zu erwarten, denn grundlegende strukturelle Schwächen dauern an.
Die Konjunktur dürfte in den kommenden zwei Jahren durch die Finanzpolitik expansive Impulse erfahren. Während die Dienstleistungsbereiche, insbesondere im öffentlichen Sektor, weiterhin kräftig zulegen, wird die Erholung im Produzierenden Gewerbe wohl nur verhalten ausfallen. Vor allem dürfte sich die Auslandsnachfrage nach deutschen Waren nicht zuletzt infolge der US-Zollpolitik weiterhin nur schleppend entwickeln. Die geplanten öffentlichen Ausgaben für Verteidigung und Infrastruktur können dies nur begrenzt abfedern, denn ein erheblicher Teil der Mittel fließt in gesamtwirtschaftlich kleine Bereiche, in denen die bestehenden Kapazitäten bereits gut ausgelastet sind. Insgesamt dürfte es in den kommenden beiden Jahren zu Kapazitätsausweitungen und entsprechenden privaten Investitionen kommen.
Das Bruttoinlandsprodukt dürfte in diesem Jahr mit einem Anstieg um 0,2 % kaum mehr als stagnieren. Im weiteren Prognosezeitraum dürfte eine expansive Finanzpolitik die Konjunktur anschieben. Im kommenden Jahr steigt das Bruttoinlandsprodukt um 1,3 % und im Jahr 2027 um 1,4 %. Damit lassen die Institute ihre Prognose für das laufende und kommende Jahr im Vergleich zum Frühjahr in etwa unverändert.
