Merz warns of “critical” economic outlook for Germany
German Chancellor Friedrich Merz on Tuesday described the country’s economic outlook as “very critical,” emphasizing that his government will prioritize restoring growth in 2026.
In a letter to lawmakers from his center-right coalition, Merz wrote that measures taken so far have not significantly improved Germany’s economic competitiveness, and that conditions remain “very critical in some areas,” News.Az reports, citing foreign media.
“In 2026, we will therefore have to focus on making the right political and legal decisions to radically improve conditions in Germany.” German news agency DPA quoted the document as saying.
Germany's economy downsized in both 2023 and 2024. Winter forecasts published in December 2025 by several major German economic institutes projected growth of merely 0.1% in 2025 amid sluggish external demand, including a sharp decline in exports to the US.
Business analysts point to high energy costs, weak global demand and slow structural reforms as well as high US tariffs, as the main obstacles for Germany’s economic recovery.
Since becoming chancellor in May 2025, Merz has vowed to rejuvenate Europe's largest economy through large-scale public spending and increased investment in defense and infrastructure.
His government has made clear that recovery will take time and has announced tax cuts and other reforms, however, business organizations stress that the pace of change remains simply too slow.
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