German economy set for strong growth after stagnation

Germany’s economy is currently stagnant, but massive investment plans are expected to change this trajectory. According to a new forecast from the economic think tank Ifo Institute, the German economy is predicted to grow by 1.5% next year. This is nearly double the previous forecast of 0.8% growth. After experiencing negative growth in 2023 and 2024, economists initially anticipated stagnation for 2025. The Ifo Institute attributes the improved forecast to Germany’s strategy of boosting the economy by significantly increasing public investments, including tax cuts and increased spending on defense and infrastructure. Similarly, the OECD expects Germany’s economy to grow by 1.2% next year, crediting the country’s growth package for the optimistic outlook. Germany’s government is currently drafting the 2025 budget, anticipated for approval on June 25.