This latest criticism highlights growing unease about Chancellor Friedrich Merz’s efforts to revive Europe’s largest struggling economy.
Geraldine Dany-Knedlik from the German Institute for Economic Research stated that such plans alone would only provide short-term relief.
She presented updated growth projections conducted jointly by several leading economic research institutes.
Dany-Knedlik warned that high costs, skills shortages and decreasing competitiveness all threaten Germany’s economic growth.
Dany-Knedlik emphasised that a “broad-based” economic recovery was not yet visible.
Merz stated that Germany needed “a new consensus” on the future structure of its welfare state.
Stefan Kooths from the Kiel Institute for the World Economy joined Dany-Knedlik in expressing concerns.
“The situation is not getting better but, at least initially, worse,“ Kooths said.
“A junkie handed a full syringe will feel better after the shot but no one would think, certainly not a doctor, ‘Ah now the patient has recovered’,“ he explained.
The seven institutes collectively raised their 2025 growth forecast by 0.1% to 0.2% compared to April projections.
They maintained their 2026 growth forecast at 1.3%, attributing this to increased government spending. – AFP
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