German Economic Council significantly revises up growth forecast, chair says
SPY•Germany's Council of Economic Experts revised its growth forecasts significantly upward after a quicker-than-expected recovery from energy shocks linked to the Iran war. Chancellor Friedrich Merz said the forecasts were revised to around 1%, with growth expected to continue into the coming year.
1. Forecasts rise
Council chair Monika Schnitzer said Germany was seeing a clear economic upturn, driven by surprisingly strong exports and high levels of government spending. Merz said the revised forecasts were around 1% and that the upswing was expected to continue into the coming year.
2. Spending and revenues
Merz has pledged structural reforms, including an overhaul of the pension system, alongside record spending on infrastructure and defence. Schnitzer warned that projected federal revenue would not cover planned expenditure over the long term, and said reversing reliance on debt financing would require difficult decisions.
3. Credit rating
Merz said his government was aware of the funding challenges and would do everything in its power to maintain Germany's AAA credit rating.
