11.12.2025 • 34/2025
Slight upturn on the horizon, structural problems remain
As the year draws to a close, it remains uncertain whether the German economy is on a path to recovery, as export weakness persisted through the autumn. Nevertheless, a slight upturn is forecast for 2026, supported by fiscal stimulus and rising real incomes. According to the winter forecast of the Halle Institute for Economic Research (IWH), output is projected to grow by 1.0% in 2026, after an increase of just 0.2% in 2025. In September, the IWH economists had predicted growth of 0.8% for 2026 and 0.2% for the current year. According to this forecast, the pace of expansion in East Germany is expected to be slightly slower, mainly due to demographic factors.
Oliver Holtemöller
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25.09.2025 • 29/2025
Fiscal policy will stimulate the East German economy next year – Economic Forecast Fall 2025 for the East German economy
In 2025, the economy in East Germany, as in Germany as a whole, is likely to do little more than stagnate. In the coming year, fiscal policy measures will stimulate the economy, but their effects are likely to be somewhat weaker than in Germany as a whole. The Halle Institute for Economic Research (IWH) expects the expansion rate of the East German economy in 2025 to be at 0.3%, slightly higher than that of Germany as a whole (0.2%). In both following years, it will rise to 1.1% and 1.2% respectively, which is slightly less than in the west.
Oliver Holtemöller
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25.09.2025 • 28/2025
Joint Economic Forecast Autumn 2025: Fiscal stimulus masks structural weakness
The German economy is emerging from the trough and is likely to regain some momentum over the next two years. Following stagnation in the first half of the year, the Joint Economic Forecast project group predicts gross domestic product growth of 0.2% for the current year in its fall report. In the next two years, an expansionary fiscal policy is likely to accelerate economic growth noticeably to 1.3% and 1.4%, respectively. This means that the institutes' forecast for this year and next remains roughly unchanged from the spring report. “The German economy is still on shaky ground,” says Dr Geraldine Dany-Knedlik, head of the Forecasting and Economic Policy Division at the German Institute for Economic Research (DIW Berlin). “It will recover noticeably in the next two years. However, given ongoing structural weaknesses, this momentum will not last.”
Oliver Holtemöller
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04.09.2025 • 26/2025
Recovery on shaky ground – tariffs dampen growth, but a change in fiscal policy is on the way
In late summer 2025, it is still unclear whether the German economy is on the road to recovery, as it has to cope with the dampening effect of higher US tariffs in the second half of the year. It is not until 2026 that fiscal policy stimulus measures, combined with low key interest rates, will probably lead to an economic upturn. According to the autumn forecast of the Halle Institute for Economic Research (IWH), production is then expected to increase by 0.8%, following 0.2% in 2025. Similar rates of expansion are also expected for East Germany. In June, the IWH economists were forecasting growth of 1.1% for 2026 and 0.4% for the current year.
Oliver Holtemöller
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IWH-Flash-Indikator III. und IV. Quartal 2025
Katja Heinisch, Oliver Holtemöller, Axel Lindner, Birgit Schultz
IWH-Flash-Indikator,
No. 3,
2025
Abstract
Nach einem verhalten positiven Start ins Jahr hat die deutsche Wirtschaft im zweiten Quartal 2025 mit einem Rückgang um 0,1% im Vergleich zum Vorquartal erneut einen Dämpfer erhalten. Hauptursache für den leichten Produktionsrückgang im zweiten Quartal waren rückläufige Investitionen in Ausrüstungen und in Bauten, die durch den Anstieg der privaten und staatlichen Konsumausgaben nicht vollständig ausgeglichen werden konnten. Zudem hat die drastische Revision der amtlichen Statistik das Konjunkturbild der vergangenen drei Jahre grundlegend verändert: Es zeigt nun statt einer seit 2022 anhaltenden Stagnation eine kräftige Erholung nach den pandemiebedingten Einbußen in den Jahren 2021 und 2022 und seit Ende 2022 einen fortgesetzten Rückgang der Produktion, der erst in der zweiten Jahreshälfte 2024 vorläufig zum Ende kam.
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12.06.2025 • 19/2025
Economic recovery in Germany – but structural problems and US trade policy weigh on the economy
The German economy has picked up somewhat in the first half of 2025. This was helped by the temporary increase in demand from the US in anticipation of higher tariffs. If the US does not escalate its trade conflicts further, production in Germany according to the summer forecast of the Halle Institute for Economic Research (IWH) is likely to increase a bit (by 0.4%) in 2025, after two years of decline. In March, the IWH economists were forecasting growth of 0.1% for the current year. Growth of 1.1% is forecast for the year 2026. Similar expansion rates are to be expected for East Germany.
Oliver Holtemöller
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21.05.2025 • 17/2025
Uncertainty Holds Back European Economy ‒ Report by AIECE, a Network of European Economic Research Institutes
The AIECE Association of European Economic Research Institutes has today published its bi-annual General Report, following the Spring 2025 Meeting held in Oslo hosted by Statistics Norway. The Halle Institute for Economic Research (IWH) is a long-time member of this network and regularly contributes its economic expertise to the joint analyses and forecasts. On average, AIECE member institutes forecast EU GDP to grow by of 1.2% in 2025 and 1.5% in 2026. The average forecast for Euro Area GDP growth is 1.0% and 1.3%. These forecasts are a bit more optimistic than those presented in the OECD's March 2025 Interim Report and the IMF's Spring 2025 World Economic Outlook.
Axel Lindner
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IWH-Flash-Indikator II. und III. Quartal 2025
Katja Heinisch, Oliver Holtemöller, Axel Lindner, Birgit Schultz
IWH-Flash-Indikator,
No. 2,
2025
Abstract
Nach einer Phase weitgehender Stagnation zeigt die deutsche Wirtschaft zu Beginn des Jahres 2025 Anzeichen einer leichten Erholung. Im ersten Quartal stieg das Bruttoinlandsprodukt (BIP) um 0,2% und machte damit den Rückgang aus dem vierten Quartal 2024 wieder wett. Dennoch bleibt die wirtschaftliche Dynamik insgesamt sehr verhalten (vgl. Abbildung 1). Zwar legten sowohl der private Konsum als auch die Investitionen gegenüber dem Vorquartal zu, doch deutet bislang wenig auf eine nachhaltige Trendwende hin.
Auch wenn sich die aktuelle Geschäftslage vieler Unternehmen verbessert hat, trüben sich die Erwartungen bereits wieder ein. Neben der Unsicherheit bezüglich der US-Wirtschaftspolitik, die sich dämpfend auf die Investitionsneigung auswirkt, ist derzeit schwer abschätzbar, inwieweit die neue Bundesregierung Impulse setzen kann. Eine schnelle wirtschaftliche Erholung ist nicht zu erwarten. Laut IWH-Flash-Indikator wird das BIP im zweiten Quartal 2025 um 0,3% und im dritten Quartal um 0,2% zulegen.
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10.04.2025 • 14/2025
In East Germany, as in the west, the economy is in crisis - Implications of the Joint Economic Forecast Spring 2025 and new data for the East German economy
In 2024, the economy in East Germany shrank by 0.1% and in Germany as a whole by 0.2%. The Halle Institute for Economic Research (IWH) expects stagnation for East Germany in 2025 and growth of 1.1% in 2026. According to the IWH forecast, the unemployment rate is expected to be 7.8% in both 2025 and 2026, after 7.5% in 2024.
Oliver Holtemöller
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10.04.2025 • 13/2025
Joint Economic Forecast 1/2025: Geopolitical turn intensifies crisis – structural reforms even more urgent
The German economy will continue to tread water in 2025. In their spring report, the leading economic research institutes forecast an increase in gross domestic product of just 0.1% for the current year. For 2026, the institutes expect gross domestic product to increase by 1.3%. In the short term, the new US trade policy and economic policy uncertainty are weighing on the German economy. The additional scope for public debt should gradually have an expansionary effect, but threatens to crowd out private consumption and private investment.
Oliver Holtemöller
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