Merz Warns of Germany’s Fragile Economic Outlook
In a message addressed to members of his center-right coalition, Merz acknowledged that measures taken so far have not sufficiently strengthened Germany’s competitiveness, noting that the situation remains “very critical in some areas.”
He added, “In 2026, we will therefore have to focus on making the right political and legal decisions to radically improve conditions in Germany,” according to a news agency, which cited the document.
Germany’s economy contracted in both 2023 and 2024. Forecasts released in December 2025 by leading German economic institutes predicted only 0.1% growth in 2025, citing weak external demand and a sharp fall in exports to the United States.
Experts highlight high energy prices, sluggish global demand, slow structural reforms, and steep U.S. tariffs as the primary barriers to recovery.
Since assuming office in May 2025, Merz has pledged to revitalize Europe’s largest economy through expansive public spending and greater investment in defense and infrastructure.
His administration has introduced tax reductions and other reforms, but business groups argue that the pace of transformation remains far too gradual to deliver meaningful improvement.
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