Merz: German economy enters growth phase after three years of recession and stagnation
Chancellor says core indicators and third‑quarter strength will push the recession to be fully overcome by year‑end; Ifo business climate rose unexpectedly in August.
German Chancellor Friedrich Merz said the country’s economy has returned to growth after three years of recession and stagnation, despite the wars in the Gulf and in Ukraine and ongoing global trade disputes. He added that core economic indicators back this optimism and that the recession will be fully overcome by the end of the year, helped by strong third‑quarter momentum.
Key data and outlook
Merz pointed to an upward revision in forecasts for 2027 and said Germany could achieve growth of at least 1 percent next year. His assessment was bolstered by the latest Ifo Institute report, which showed the business climate index unexpectedly rose by 2.1 points in August to 88.8 — the highest reading in the past year.
The chancellor highlighted that after contractions in 2023 and 2024 and a year of stagnation, the economy recorded growth of 0.3 percent in the second quarter. He portrayed that recovery as evidence the worst of the downturn is behind the country.
Finance Minister Lars Klingbeil emphasised the role of a special €500 billion fund for infrastructure and climate protection, calling it a decisive step that helped avert a deeper recession.
Merz nevertheless warned that external risks remain, citing the conflicts in the Gulf and Ukraine and international trade tensions as factors that could still weigh on the recovery.
Officials and analysts will be watching the third‑quarter data closely in the coming weeks to confirm whether the recovery gains sufficient momentum to deliver the revised forecasts for next year.
Photo: press material from the event
